a) return on equityb) return on assestsc) return on capital Financial Ratios. Here are simplified financial statements for Phone Corporation in a recent7.year:INCOME STATEMENT(Figures in $ millions)13,1934,060Net salesCost of goods soldOther expensesDepreciationEarnings before interest and taxes (EBIT)Interest expense4,0492,5182,566685Income before tax1,881Taxes (at 35%)658Net income1,223Dividends856BALANCE SHEET(Figures in $ millions)End of YearStart of YearAssetsCash and marketable securities$ 89%24158Receivables2,3821872,490Inventories ne238Other current assets867932$ 3,525$ 3,81819,915Total current assetsNet property, plant, and equipmentOther long-term assets19,9734,216$27,7143,770$27,503Total assetsLiabilities and shareholders' equityPayablesShort-term debt$ 2,564$ 3,0401,5731,419Other current liabilities811787Total current liabilities$ 4,794$ 5,400Long-term debt and leasesOther long-term liabilitiesShareholders' equityTotal liabilities and shareholders' equity7,0186,8336,1499,121$27,5036,1789,724$27,714Calculate the following financial ratios for Phone Corporation: (LO4-3)

Ratio analysis is a method of analyzing a company's liquidity, profitability, and operational…

Answered: eturn on equity b) return on assests…

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eturn on equity b) return on assests c) return on capital

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter16: Financial Statement Analysis

Section: Chapter Questions

Problem 4PB

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Question

a) return on equity

b) return on assests

c) return on capital

Financial Ratios. Here are simplified financial statements for Phone Corporation in a recent
7.
year:
INCOME STATEMENT
(Figures in $ millions)
13,193
4,060
Net sales
Cost of goods sold
Other expenses
Depreciation
Earnings before interest and taxes (EBIT)
Interest expense
4,049
2,518
2,566
685
Income before tax
1,881
Taxes (at 35%)
658
Net income
1,223
Dividends
856
BALANCE SHEET
(Figures in $ millions)
End of Year
Start of Year
Assets
Cash and marketable securities
$ 89
%24
158
Receivables
2,382
187
2,490
Inventories ne
238
Other current assets
867
932
$ 3,525
$ 3,818
19,915
Total current assets
Net property, plant, and equipment
Other long-term assets
19,973
4,216
$27,714
3,770
$27,503
Total assets
Liabilities and shareholders' equity
Payables
Short-term debt
$ 2,564
$ 3,040
1,573
1,419
Other current liabilities
811
787
Total current liabilities
$ 4,794
$ 5,400
Long-term debt and leases
Other long-term liabilities
Shareholders' equity
Total liabilities and shareholders' equity
7,018
6,833
6,149
9,121
$27,503
6,178
9,724
$27,714
Calculate the following financial ratios for Phone Corporation: (LO4-3)

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