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10-400-13 Lecture Notes - Lecture 3: Profit Margin, Pension, Operating Margin

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School
HEC Montréal
Department
10
Course
10-400-13
Professor
Sebastien Bouthier

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1-902-13: Use of Accounting Information
Session 11
EMPLOYEE BENEFITS
Using the excerpts from the financial statements of Saputo dated March 31, 2013, please answer
the questions below.
Exercise prepared by Maxime Clément / Summer 2014, December 2014 1 of 7
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1-902-13: Use of Accounting Information
Session 11
EXCERPT OF THE NOTE CONCERNING ACCOUNTING POLICIES
Exercise prepared by Maxime Clément / Summer 2014, December 2014 2 of 7
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Document Summary

Using the excerpts from the financial statements of saputo dated march 31, 2013, please answer the questions below. Questions: what type(s) of pension plans is/are in effect in saputo in the year ended march 31, 2013? (amounts not required) In note 17, we see that in addition to the pension plans (post-employment benefit plans), Integration questions: the pension commitments are recognized in liabilities as provisions because these commitments meet certain criteria. Please identify these criteria: true or false. The net expense related to pension commitments and similar benefits affects the calculation of saputo"s gross profit margin for the year ended march 31, 2013. This value (current investment value) is not enough on march 31, 2013, to cover saputo"s obligation on that date. There are obligations under the defined benefit plan of 268,159 million euros. (defined benefit obligation page4: 3,964 million euros: 3,452 million euros for pension commitments and 512 million euros for other commitments. (screen p4)

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Related Questions

Nineteen Measures of Solvency and Profitability

The comparative financial statements of Blige Inc. are asfollows. The market price of Blige Inc. common stock was $58 onDecember 31, 2014.

BligeInc.
ComparativeRetained Earnings Statement
For the YearsEnded December 31, 2014 and 2013
2014 2013
Retained earnings,January 1 $3,908,225 $3,327,175
Add net income foryear 864,000 681,500
Total $4,772,225 $4,008,675
Deduct dividends
On preferred stock $14,000 $14,000
On common stock 86,450 86,450
Total $100,450 $100,450
Retained earnings,December 31 $4,671,775 $3,908,225


BligeInc.
ComparativeIncome Statement
For the YearsEnded December 31, 2014 and 2013
2014 2013
Sales $5,854,530 $5,386,200
Sales returns and allowances 29,130 18,930
Net sales $5,825,400 $5,367,270
Cost of goods sold 2,265,920 2,084,650
Gross profit $3,559,480 $3,282,620
Selling expenses $1,200,940 $1,471,350
Administrative expenses 1,023,030 864,130
Total operating expenses 2,223,970 2,335,480
Income from operations $1,335,510 $947,140
Other income 70,290 60,460
$1,405,800 $1,007,600
Other expense (interest) 424,000 233,600
Income before income tax $981,800 $774,000
Income tax expense 117,800 92,500
Net income $864,000 $681,500


BligeInc.
ComparativeBalance Sheet
December 31,2014 and 2013
Dec. 31, 2014 Dec. 31, 2013
Assets
Current assets
Cash $1,469,540 $810,140
Temporaryinvestments 2,224,170 1,342,520
Accounts receivable(net) 1,073,100 1,007,400
Inventories 803,000 613,200
Prepaid expenses 278,030 162,030
Total current assets $5,847,840 $3,935,290
Long-terminvestments 133,888 -1,015,018
Property, plant, andequipment (net) 7,420,000 6,678,000
Total assets $13,401,728 $9,598,272
Liabilities
Currentliabilities $1,719,953 $1,060,047
Long-termliabilities
Mortgage note payable,8%, due 2019 $2,380,000 $0
Bonds payable, 8%, due2015 2,920,000 2,920,000
Total long-term liabilities $5,300,000 $2,920,000
Total liabilities $7,019,953 $3,980,047
Stockholders'Equity
Preferred $0.70 stock,$40 par $800,000 $800,000
Common stock, $10par 910,000 910,000
Retained earnings 4,671,775 3,908,225
Total stockholders'equity $6,381,775 $5,618,225
Total liabilities andstockholders' equity $13,401,728 $9,598,272

Required:

Determine the following measures for 2014, rounding to onedecimal place, except for dollar amounts, which should be roundedto the nearest cent. Use the rounded answer of the requirement forsubsequent requirement, if required. Assume 365 days a year.

1. Workingcapital $
2. Currentratio
3. Quickratio
4. Accountsreceivable turnover
5. Number of days'sales in receivables days
6. Inventoryturnover
7. Number of days'sales in inventory days
8. Ratio of fixedassets to long-term liabilities
9. Ratio ofliabilities to stockholders' equity
10. Number oftimes interest charges are earned
11. Number oftimes preferred dividends are earned
12. Ratio of netsales to assets
13. Rate earned ontotal assets %
14. Rate earned onstockholders' equity %
15. Rate earned oncommon stockholders' equity %
16. Earnings pershare on common stock $
17. Price-earningsratio
18. Dividends pershare of common stock $
19. Dividendyield %

Nineteen Measures of Solvency and Profitability

The comparative financial statements of Blige Inc. are asfollows. The market price of Blige Inc. common stock was $67 onDecember 31, 2014.

BligeInc.
ComparativeRetained Earnings Statement
For the YearsEnded December 31, 2014 and 2013
2014 2013
Retained earnings,January 1 $2,462,275 $2,085,025
Add net income foryear 585,200 427,000
Total $3,047,475 $2,512,025
Deduct dividends
On preferred stock $7,000 $7,000
On common stock 42,750 42,750
Total $49,750 $49,750
Retained earnings,December 31 $2,997,725 $2,462,275


BligeInc.
ComparativeIncome Statement
For the YearsEnded December 31, 2014 and 2013
2014 2013
Sales $3,805,440 $3,501,000
Sales returns and allowances 18,930 12,300
Net sales $3,786,510 $3,488,700
Cost of goods sold 1,312,540 1,207,540
Gross profit $2,473,970 $2,281,160
Selling expenses $855,260 $1,061,320
Administrative expenses 728,560 623,320
Total operating expenses 1,583,820 1,684,640
Income from operations $890,150 $596,520
Other income 46,850 38,080
$937,000 $634,600
Other expense (interest) 272,000 149,600
Income before income tax $665,000 $485,000
Income tax expense 79,800 58,000
Net income $585,200 $427,000


BligeInc.
ComparativeBalance Sheet
December 31,2014 and 2013
Dec. 31, 2014 Dec. 31, 2013
Assets
Current assets
Cash $789,490 $607,960
Temporaryinvestments 1,194,900 1,007,470
Accounts receivable(net) 686,200 642,400
Inventories 511,000 394,200
Prepaid expenses 149,354 121,590
Total current assets $3,330,944 $2,773,620
Long-terminvestments 1,131,279 319,300
Property, plant, andequipment (net) 4,080,000 3,672,000
Total assets $8,542,223 $6,764,920
Liabilities
Currentliabilities $1,074,498 $1,362,645
Long-termliabilities
Mortgage note payable,8%, due 2019 $1,530,000 $0
Bonds payable, 8%, due2015 1,870,000 1,870,000
Total long-term liabilities $3,400,000 $1,870,000
Total liabilities $4,474,498 $3,232,645
Stockholders'Equity
Preferred $0.70 stock,$50 par $500,000 $500,000
Common stock, $10par 570,000 570,000
Retained earnings 2,997,725 2,462,275
Total stockholders'equity $4,067,725 $3,532,275
Total liabilities andstockholders' equity $8,542,223 $6,764,920

Required:

Determine the following measures for 2014, rounding to onedecimal place, except for dollar amounts, which should be roundedto the nearest cent. Use the rounded answer of the requirement forsubsequent requirement, if required. Assume 365 days a year.

1. Workingcapital $
2. Currentratio
3. Quickratio
4. Accountsreceivable turnover
5. Number of days'sales in receivables days
6. Inventoryturnover
7. Number of days'sales in inventory days
8. Ratio of fixedassets to long-term liabilities
9. Ratio ofliabilities to stockholders' equity
10. Number oftimes interest charges are earned
11. Number oftimes preferred dividends are earned
12. Ratio of netsales to assets
13. Rate earned ontotal assets %
14. Rate earned onstockholders' equity %
15. Rate earned oncommon stockholders' equity %
16. Earnings pershare on common stock $
17. Price-earningsratio
18. Dividends pershare of common stock $
19. Dividendyield %

******ALREADY HAVE SUB QUESTIONS 1-4, NEED HELP WITH THEREST. ******

Nineteen Measures of Solvency and Profitability

The comparative financial statements of Blige Inc. are asfollows. The market price of Blige Inc. common stock was $52 onDecember 31, 2014.

BligeInc.
ComparativeRetained Earnings Statement
For the YearsEnded December 31, 2014 and 2013
2014 2013
Retained earnings,January 1 $2,338,175 $1,968,225
Add net income foryear 496,800 403,100
Total $2,834,975 $2,371,325
Deduct dividends
On preferred stock $8,400 $8,400
On common stock 24,750 24,750
Total $33,150 $33,150
Retained earnings,December 31 $2,801,825 $2,338,175
BligeInc.
ComparativeIncome Statement
For the YearsEnded December 31, 2014 and 2013
2014 2013
Sales $3,354,615 $3,086,200
Sales returns and allowances 16,690 10,850
Net sales $3,337,925 $3,075,350
Cost of goods sold 1,083,320 996,650
Gross profit $2,254,605 $2,078,700
Selling expenses $821,200 $970,600
Administrative expenses 699,535 570,040
Total operating expenses 1,520,735 1,540,640
Income from operations $733,870 $538,060
Other income 38,630 34,340
$772,500 $572,400
Other expense (interest) 208,000 114,400
Income before income tax $564,500 $458,000
Income tax expense 67,700 54,900
Net income $496,800 $403,100
BligeInc.
ComparativeBalance Sheet
December 31,2014 and 2013
Dec. 31, 2014 Dec. 31, 2013
Assets
Current assets
Cash $689,450 $405,030
Temporaryinvestments 1,043,500 671,200
Accounts receivable(net) 584,000 547,500
Inventories 438,000 335,800
Prepaid expenses 130,436 81,010
Total current assets $2,885,386 $2,040,540
Long-terminvestments 1,535,082 362,383
Property, plant, andequipment (net) 2,860,000 2,574,000
Total assets $7,280,468 $4,976,923
Liabilities
Currentliabilities $848,643 $178,748
Long-termliabilities
Mortgage note payable,8%, due 2019 $1,170,000 $0
Bonds payable, 8%, due2015 1,430,000 1,430,000
Total long-term liabilities $2,600,000 $1,430,000
Total liabilities $3,448,643 $1,608,748
Stockholders'Equity
Preferred $0.70 stock,$40 par $480,000 $480,000
Common stock, $10par 550,000 550,000
Retained earnings 2,801,825 2,338,175
Total stockholders'equity $3,831,825 $3,368,175
Total liabilities andstockholders' equity $7,280,468 $4,976,923

Required:

Determine the following measures for 2014, rounding to onedecimal place, except for dollar amounts, which should be roundedto the nearest cent. Use the rounded answer of the requirement forsubsequent requirement, if required. Assume 365 days a year.

1. Workingcapital $
2. Currentratio
3. Quickratio
4. Accountsreceivable turnover
5. Number of days'sales in receivables days
6. Inventoryturnover
7. Number of days'sales in inventory days
8. Ratio of fixedassets to long-term liabilities
9. Ratio ofliabilities to stockholders' equity
10. Number oftimes interest charges are earned
11. Number oftimes preferred dividends are earned
12. Ratio of netsales to assets
13. Rate earned ontotal assets %
14. Rate earned onstockholders' equity %
15. Rate earned oncommon stockholders' equity %
16. Earnings pershare on common stock $
17. Price-earningsratio
18. Dividends pershare of common stock $
19. Dividendyield %