Due Tues., May 2- 7 questions Big Time Picture Frames h.docx

Due Tues., May 2- 7 questions
Big Time Picture Frames has asked you to determine whether
the company's ability to pay current
liabilities and total liabilities improved or deteriorated during
2009. To answer this question, you gather the
following data:
______________________________________________2009___
_______2008
Cash $52, 000 51, 000
Short-term investments 30,000 --
Net receivables 110,000 120, 000
Inventory 217,000 262,000
Total assets 540,000 490,000
Total current liabilities 265,000 202,000
Long-term note payable 44,000 54,000
Income from operations 165,000 153,000
Interest expense 44,000 37,000
Requirement
1. Compute the following ratios for 2009 and 2008:
a. Current ratio
b. Acid-test ratio
c. Debt ratio
d. Times-interest-earned ratio
a. Calculate the current ratio for both years. (Round your
answers to two decimal places.)

2009: nothing
2008: nothing
The Variline Inc., comparative income statement follows. 2010
data are given as needed.
Variline, Inc.
Comparative Income Statement
Years Ended December 31, 2012 and 2011
(Dollars in thousands) 2012 2011 2010
Net sales $176,000 $160,000
Cost of goods sold 93,600 86,000
Selling and general expenses 46,800 41,400
Interest expense 9,600 10,900
Income tax expense 10,200 9,200
Net income $15,800 $12,500
Additional data:

Total assets $201,000 $192,000 $174,000
Common stockholders' equity $96,900 $89,800 $79,500
Preferred dividends $3,400 $3,400 $0
Common shares outstanding during the
year 20,000 20,000 18,000
Requirements
1. Calculate the rate of return on net sales.
2. Calculate the rate of return on total assets.
3. Calculate the rate of return on common stockholders' equity.
4. Calculate the EPS.
5. Did the company's operating performance improve or
deteriorate during 2012?
Requirement 1. Calculate the rates of return on net sales for
2012 and 2011. (Round your answers to
three decimal places.)
2012:
nothing
2011: nothing

The Specialty Department Stores, Inc., chief executive officer
(CEO) has asked you to compare the
company's profit performance and financial position with the
average for the industry. The CEO has
given you the company's income statement and balance sheet, as
well as the industry average data for
retailers.
Specialty Department Stores, Inc.
Income Statement Compared with Industry Average
Year Ended December 31, 2010
Industry
Specialty Average
Net sales $782,000 100.0 %
Cost of goods sold 526,286 65.8
Gross profit 255,714 34.2
Operating expenses 164,220 19.7

Operating income 91,494 14.5
Other expenses 6,256 0.4
Net income $85,238 14.1 %
Balance Sheet Compared with Industry Average
December 31, 2010
Industry
Specialty Average
Current assets $324,960 70.9 %
Fixed assets, net 123,840 23.6
Intangible assets, net 8,160 0.8
Other assets 23,040 4.7
Total assets $480,000 100.0 %
Current liabilities $221,760 48.1 %

Long-term liabilities 106,560 16.6
Stockholders' equity 151,680 35.3
Total liabilities and stockholders'
equity $480,000 100.0 %
Requirements
1. Prepare a common-size income statement and balance sheet
for Specialty.
The first column of each statement should present Specialty
common-size statement, and the second
column, the industry averages.
2. For the profitability analysis, compute Specialty's (a) ratio of
gross profit to net sales, (b) ratio of
operating income to net sales, and (c) ratio of net income to net
sales. Compare these figures with the
industry averages. Is Specialty's profit performance better or
worse than the industry average?
3. For the analysis of financial position, compute Specialty's (a)
ratio of current assets to total assets and
(b) ratio of stockholders' equity to total assets. Compare these
ratios with the industry averages. Is
Specialty's financial position better or worse than the industry
averages?

Requirement 1. Prepare a common-size income statement for
Specialty
Department Stores. (Round your answers to one decimal place.)
Common-Size Income Statement Compared to Industry Average
Specialty Industry
(%) Average (%)
Net sales 100.0
Cost of goods sold 65.8
Gross profit 34.2
Operating expenses 19.7
Operating income 14.5
Other expenses 0.4
Net income 14.1

Financial statement data of Modern Traveler Magazine include
the following items (dollars in thousands):
Cash. . . . . . . . . . . . . . . . . . . . .
. . . $24,000
Accounts receivable, net. . . . .
. . . $78,000
Inventories. . . . . . . . . . . . . . . .
. $187,000
Total assets. . . . . . . . . . . . . . .
. . . $639,000
Short-term notes payable. . . .
. . . $48,000
Accounts payable. . . . . . . . . .
. . . . $102,000
Accrued liabilities. . . . . . . . . .
. . . . $37,000

Long-term liabilities. . . . . . . .
. . . . $225,000
Net income. . . . . . . . . . . . . . .
. . . . $73,000
Common shares outstanding. .
. . . 20,000
Requirements
1. Compute Modern Traveler's current ratio, debt ratio, and
earnings per share. Round all ratios to two
decimal places.
2. Compute the three ratios after evaluating the effect of each
transaction that follows. Consider each
transaction separately.
a. Purchased inventory of $48,000 on account
b. Borrowed $125,000 on a long-term note payable
c. Issued 2,000 shares of common stock, receiving cash of
$105,000
d. Received cash on account, $8,000
Requirement 1. Compute

Modern TravelerModern Traveler's
current ratio, debt ratio, and earnings per share. Round all ratios
to two decimal places.
Current Ratio Debt Ratio Earnings Per Share
The Arborists provide tree-spraying services in the company's
home county John Renkas, the owner,
incurred the following operating costs for the month of August
2012:
Salaries and wages. . . . . . . . . . . . . . . . .
. . . . $6,000
Chemicals. . . . . . . . . . . . . . . . . . . . . . . .
. . . . . 4,900
Depreciation on truck. . . . . . . . . . . . . . .
. . . . . 450
Depreciation on building and
equipment. . . . . 700

Supplies expense. . . . . . . . . . . . . . . . . . .
. . . . 400
Gasoline and utilities. . . . . . . . . . . . . . . .
. . . . 5,590
The Arborists earned $22,000 in revenues for the month of
August by spraying trees totaling 25,000
feet in height.
Requirements
1. Prepare an income statement for the month of August.
Compute the ratio of total operating expense to
total revenue and operating income to total revenue.
2. Compute the unit operating cost of spraying one foot of tree
height.
3. The manager of The Arborists must keep unit operating cost
below $0.50 per foot in order to get his
bonus. Did he meet the goal?
4. What kind of system could The Arborists use to integrate all
its data?
Requirement 1. Prepare an income statement for the month of
August.
Compute the ratio of total operating expense to total revenue
and operating income to total revenue.
(Round the ratios to the nearest whole number.)

The Arborists
Income Statement
Month Ended August 31, 2012
Chemicals, Depreciation on bldg. &
equip, Depreciation on truck, Gasoline &
utilities, Net operating income, Net
operating loss, Salaries 7 wages, Sales
revenue, Supplies expense, Total
operating expenses %
%
%
Choose from any list or enter any number in the input fields and

then click Check Answer.
In 2011 Chris Gonzales opened Chris' Pets, a small retail shop
selling pet supplies. On
December, 31, 2011, Chris's accounting records showed the
following:
Inventory on December 31, 2011 $10,250
Inventory on January 1, 2011 15,400
Sales revenue 52,000

Utilities for shop 3,300
Rent for shop 4,100
Sales commissions 2,550
Purchases of merchandise 24,000
Requirement
1. Prepare an income statement for Chris' Pets, a merchandiser,
for the year ended December 31, 2011.
Chris' Pets
Income Statement
Advert. Expense, Beginning inventory, Cost of goods
avail. for sale, Cost of goods sold, Ending inventory,
Gross profit, Operating profit, Operating loss, Purchases
of merch., Rent exp., Sales commissions exp., Sales Rev.,
Utilities exp.
Cost of goods sold:

Cost of goods sold
Gross profit
Operating expenses:
Craig’s Pets succeeded so well that Craig decided to
manufacture his own brand of chewing
bone—Fido TreatsFido Treats. At the end of December 2011,
his accounting records showed the
following:
Inventories: Beginning Ending
Materials $13,500
$9,000
Work in process 0
1,250

Finished goods 0 5,200
Other information:
Direct material purchases $31,000
Utilities for plant $1,100
Plant janitorial services 500
Rent on plant 13,000
Sales salaries expense 5,800
Customer service hotline
expense 1,700
Delivery expense 1,400
Direct labor 17,000
Sales revenue 111,000
Requirements
1. Prepare a schedule of cost of goods manufactured for Fido

Treats for the year ended December 31,
2011.
2. Prepare an income statement for Fido Treatsfor the year
ended December 31, 2011.
3. How does the format of the income statement for Fido Treats
differ from the income statement of a
merchandiser?
4. Fido Treats manufactured 17,800 units of its product in 2011.
Compute the company's unit product cost
for the year.
Requirement 1. Prepare the schedule of cost of goods
manufactured for Fido Treats.
(For accounts with a $0 balance, make sure to enter "0" in the
appropriate column.)
Fido Treats
Schedule of Cost of Goods Manufactured
Avail. For use, Begin materials invent., Begin work
in progress invent., Cost of goods manfac., Deprec.,
exp. on plant equip., Direct labor, Direct materials
used., Ending materials invent., Ending work in
process invent., Plant janitorial serv., Purch., of direct

materials, Rent on plant., Total manfac. cost incurred
during year., Total manfac. cost to account for,
Utilities for plant
Add: Direct materials used
Direct materials used
Manufacturing overhead:
Total manufacturing costs incurred during the year
Total manufacturing costs to account for
Less:
Cost of goods manufactured
KP Mission
Kaiser Permanente exists to provide high-quality, affordable
health care services and to improve the health of our members

and the communities we serve.KP Vision
We are trusted partners in total health, collaborating with
people to help them thrive and creating communities that are
among the healthiest in the nation.
Strategy
To advance our mission on affordability, we need to:
· perform by transforming care, coverage, and cost
· grow through both core and new opportunities
· lead by increasing our relevance as a force for change in
health care
Affordability thru performance, Growth and Leadership
Fast Facts About Kaiser Permanente
Founded in 1945, Kaiser Permanente is one of the nation’s
largest not-for-profit health plans, serving more than 11.3
million members, with headquarters in Oakland, California. It
comprises:
· Kaiser Foundation Hospitals and their subsidiaries
· Kaiser Foundation Health Plan, Inc.
· The Permanente Medical Groups.
At Kaiser Permanente, physicians are responsible for medical
decisions. The Permanente Medical Groups, which provide care
for Kaiser Permanente members, continuously develop and
refine medical practices to help ensure that care is delivered in
the most efficient and effective manner possible.Health Plan
Membership, by Region
Northern California:
3,992,501
Southern California:
4,264,119
Colorado:
663,240
Georgia:

284,213
Hawaii:
249,687
Mid-Atlantic States (VA, MD, DC):
665,402
Northwest (Oregon/Washington):
552,651
Washington:
651,000
Data as of December 31, 2016 unless otherwise noted.Medical
facilities and physicians
Hospitals:
38
Medical Offices:
668
Physicians:
Approximate, representing all specialties
21,275
Nurses:
Approximate, representing all specialties
54,072
Employees:
Approximate, representing technical, administrative and clerical
employees and caregivers
201,024
Washington (Group Health) data as of December 31, 2016
combined with Kaiser Permanente data from December 31, 2016
unless otherwise noted.Annual Operating Revenue
2016: 64.6 billion2015:60.7 billion
2014: $56.4 billion
2013: $53.1 billion
2012: $50.6 billion
2011: $47.9 billion
2010: $44.2 billion
2009: $42.1 billion
2008: $40.3 billion

T H E
Responses
Responses Consumer
Expectations
Reducing
Resources
Increasing
Cost & Demand
Health Market

1
In 2014, We Set Out the Perform, Grow, Lead Strategy
CONFIDENTIAL AND PROPRIETARY. INTERNAL USE
ONLY. DO NOT DISTRIBUTE.
2
2
Since 2014, We Have Increased Strategic Focus in Key Areas
3
2014
2015

2016
One KP
Care Transformation
Cost Structure
Health Plan Services
People
Technology
Core
Contiguous
New
Affordability
Quality
Total Health
One KP
Consumer Digital Strategy
Privacy and Security
Line of Business
Mountain Colorado
Affordability Definition
Vision 2025
Medicaid
Eugene, OR
Santa Cruz, CA
Group Health Cooperative
Maui Memorial
Affordability Measurement
Advocacy
School of Medicine
Diversity and Inclusion
Total Health Impact

Experience Standards
Behavioral Health
Virtual Care
Maternal and Child Health
Enterprise People Strategy
Capacity Evaluation
Perform
Grow
Lead
3
2016

Over The Last Three Years, We Have Performed Well
4
Membership Growth
(millions)
Expense Trends
(Per Member,
Per Month)
Pricing*
(Average rate increases,
KP vs competitors)
*Large Commercial Group Rate Increases (Post Buy-
Down/Mitigation), Towers Watson Survey
5.6%
Average Growth
2014-16
1.6%
Average Growth
2011-13
700K
More members than forecasted in the 2014 Strategic Plan
(10M planned)
2.2%
Lower rate increase than competitors,
on average
2.6%
Lower than the prior 3-year average from 2011-2013
2010
2013

4
Competitor
2008-2010 2011-2013 2014-2016 6.3E-2
5.0999999999999997E-2 4.7E-2 KP
2008-2010 2011-2013 2014-2016
6.9000000000000006E-2 4.7E-2
2.5000000000000001E-2
We Have Also Advanced Our Measurement of Affordability
5
In 2015, KP Care and Coverage is affordable for
80% of people living in our communities.

We must continue
with low trends to enable affordable rates.
Service levels
declined slightly
and will be a focus.
PERFORM > We Continue to Work on High-Quality,
Affordable Care
6
Note: NCQA’s HEDIS Composite is the most widely used
standardized set of performance metrics used to report health
care quality.
HCAHPS is the most widely used metric to report hospital care
service experience.
Expense Trends (PMPM)
National 75th
Percentile
Kaiser
Permanente
We sustained
high-quality care
during growth.
Kaiser
Permanente
National 90th
Percentile
HCAHPS National 75th Percentile
Baseline Trend
2016 Plan

HEDIS Performance Measures
6
75th 2008 2009 2010 2011 2012 2013 2014 2015 70 71 72
73.3 75 76 76 77 KP
2008 2009 2010 2011 2012 2013 2014 2015 59.5
64.099999999999994 67.900000000000006
71.599999999999994 73.3 75 75.5
75.099999999999994
PERFORM > People Strategy: Underpins Everything We Do
7
Our People Strategy is an essential tool for creating and
supporting an organization where we all can say this:
“I am at my best.
I am valued and supported.
I make a difference.
I am part of a great cause.
I am KP.”

7
GROW > Three Years of Accelerated Growth Is Stabilizing
8
Total Membership
(Millions)
9.1
10.7
11.5
2.6%
Average Growth
5.6%
Average Growth
Consumers have increasingly chosen
KP since 2013. Growth is stabilizing post-ACA and we will
grow to over
11.5 million members
by 2019, with an increasing number of Individual and Medicare
members.

8
GROW > Group Health Cooperative Will Become KP
Washington
9
In 2017, KP will launch our brand in Washington and offer high
quality, more affordable care for Washington communities.
We are expanding to nearby communities in every region and
seeking new growth opportunities.
LEAD > We Are Driving Health Care Change

10
We advocate for providing the
best care in the most effective way.
Our Total Health strategy
addresses societal, economic,
and behavioral factors on
our communities.
Diversity and Inclusion actions
involve perspectives from Care, Workplace, Marketplace,
Supplier Partnerships, and Compliance.
The School of Medicine
teaches our preventive,
evidence-based care beyond
traditional care settings.
10
LOOKING AHEAD > Broadening Our Vision and Impact
11
OUR VISION:
We are trusted partners in total health, collaborating with
people to help them thrive, creating communities that are among
the healthiest in the nation, and inspiring greater health for
America and the world.

Strategic Goal Alignment
12Add each business goal or objective hereAdd each business
goal or objective hereAdd each business goal or objective
hereAdd each business goal or objective here
1
3
Activity: How Can You Support KP’s Strategic Plan?
13
Review Kaiser Permanente’s strategic plan. Identify at least one
of the plan components (Perform, Grow, and Lead) that you
think your team should focus on this year. Discuss your ideas
with your partner.
Write down the business objectives that you hope to achieve on
the activity worksheet. (Consider using the SMART* model to
define your goals.)
Talk about it for 5 minutes.

2
*SMART goals are specific, measurable, attainable, realistic,
and timely/tangible
Action Plan
14
Review Kaiser Permanente’s strategic plan with your team
members.
Brainstorm ways that you and your team can support our
strategy through the framework of Perform, Grow, Lead.
Set SMART goals with your team members that you intend to
achieve this year.
1
2
3
Focus on Affordability
“We need to become an organization that is truly focused on
meeting the needs of consumers. To do that, we need to create
the best experiences for our members and consumers, no matter
where or how they come in contact with us. That is the essence
of One KP.”
— Bernard Tyson

Chairman and CEO
Kaiser Permanente
15
share.kp.org/strategy
Visit KP’s national
strategy website:
Our mission is to provide high-quality, affordable health care
services and to improve the health
of our members and the communities we serve
15
8.7 9.1 10.7 2008-20102011-20132014-2016
6.1%4.3%1.7%2008-20102011-20132014-2016

77%70%68%65%4%8%8%9%13%13%14%16%6%9%10%10%2
013201620192025CommercialIndividualMedicareMedicaid

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