20Υ8 20Y7 20Y6 20Υ5 20Y4 % b. Return on stockholders equity: 20Y8 20Y7 20Y6 20Υ5 20Υ4 % C. Times interest earned: 20Y8 20Υ7 20Y6 20Y5 20Y4 d. Ratio of liabilities to stockholders' equity: econ.docx SP P Type here to search o 耳# 重 6:10. 59°F 10/30/ 112 prt sc %24 వి వ Addai Company has provided the following comparative information: 20Y8 20Υ7 20Υ6 20Y5 20Y4 Net income $1,120,400 $965,900 $811,700 $693,800 $588,000 Interest expense 380,900 347,700 300,300 229,000 182,300 Income tax expense 358,528 270,452 227,276 180,388 141,120 Total assets (ending balance) 6,308,280 6,633,962 4,788,646 4,965,740 3,765,686 Total stockholders' equity (ending balance) 2,021,243 2,424,789 1,550,109 1,918,695 1,151,217 Average total assets 6,471,121 5,711,304 4,877,193 4,138,117 3,517,352 Average stockholders' equity 2,223,016 1,987,449 1,734,402 1,534,956 1,342,466 You have been asked to evaluate the historical performance of the company over the last five years. Selected industry ratios have remained relatively steady at the following levels for the last five years: 20Υ4+20Υ8 Return on total assets 22.9% Return on stockholders' equity 47.2% Times interest earned 4.6 Ratio of liabilities to stockholders' equity 2.1 Required: 1. Determine the following for the years 20Y4 through 20Y8. Round to one decimal place: a. Return on total assets: econ.docx P Type here to search Sh 59 F A @ 6:10 A 10/30/2 EGO 144 In 144 prt sc tab %24
Reporting Cash Flows
Reporting of cash flows means a statement of cash flow which is a financial statement. A cash flow statement is prepared by gathering all the data regarding inflows and outflows of a company. The cash flow statement includes cash inflows and outflows from various activities such as operating, financing, and investment. Reporting this statement is important because it is the main financial statement of the company.
Balance Sheet
A balance sheet is an integral part of the set of financial statements of an organization that reports the assets, liabilities, equity (shareholding) capital, other short and long-term debts, along with other related items. A balance sheet is one of the most critical measures of the financial performance and position of the company, and as the name suggests, the statement must balance the assets against the liabilities and equity. The assets are what the company owns, and the liabilities represent what the company owes. Equity represents the amount invested in the business, either by the promoters of the company or by external shareholders. The total assets must match total liabilities plus equity.
Financial Statements
Financial statements are written records of an organization which provide a true and real picture of business activities. It shows the financial position and the operating performance of the company. It is prepared at the end of every financial cycle. It includes three main components that are balance sheet, income statement and cash flow statement.
Owner's Capital
Before we begin to understand what Owner’s capital is and what Equity financing is to an organization, it is important to understand some basic accounting terminologies. A double-entry bookkeeping system Normal account balances are those which are expected to have either a debit balance or a credit balance, depending on the nature of the account. An asset account will have a debit balance as normal balance because an asset is a debit account. Similarly, a liability account will have the normal balance as a credit balance because it is amount owed, representing a credit account. Equity is also said to have a credit balance as its normal balance. However, sometimes the normal balances may be reversed, often due to incorrect journal or posting entries or other accounting/ clerical errors.
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