Question

Key Relations: Revenues, Expenses, Dividends, and Retained Earnings (a) Compute the missing amounts (in millions) in...

Key Relations: Revenues, Expenses, Dividends, and Retained Earnings (a) Compute the missing amounts (in millions) in the following table. (The balance in retained earnings at year-end 2012 was $2.2.) Hint: Dividends reduce the retained earnings account. Round answers one decimal place. 2010 2011 2012 Retained earnings (beginning) $0.9 $1.7 $Answer Revenues 9.1 12.1 12.1 Expenses 7.4 Answer 11.0 Dividends Answer 0.6 0.6 (b) Calculate expenses as a percentage of revenues for the three years. Round your answer to one decimal place. 2010 2011 2012 Answer % Answer % Answer % (c) Calculate net income as a percentage of revenues for the three years. Round your answer to one decimal place. 2010 2011 2012 Answer % Answer % Answer %

Homework Answers

Answer #1

Income statement

2010 2011 2012
Revenues 9.1 12.1 12.1
Expenses - 7.4 - 11.5 - 11
Net income 1.7 0.6 1.1

Retained earnings statement

2010 2011 2012
Retained earnings, beginning 0.9 1.7 1.7
Net income 1.7 0.6 1.1
Dividend - 0.9 - 0.6 - 0.6
Retained earnings, ending 1.7 1.7 2.2

Vertical analysis

Income statement

2010 % of revenue 2011 % of revenue 2012 % of revenue
Revenues 9.1 100 12.1 100 12.1 100
Expenses - 7.4 81.3 - 11.5 95 - 11 90.9
Net income 1.7 18.7 0.6 5 1.1 9.09

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