Here are simplified financial statements for Phone Corporation in a recent year: INCOME STATEMENT (Figures in $ millions) Net sales $ 13,600 Cost of goods sold 4,310 Other expenses 4,162 Depreciation 2,668 Earnings before interest and taxes (EBIT) $ 2,460 Interest expense 710 Income before tax $ 1,750 Taxes (at 30%) 525 Net income $ 1,225 Dividends $ 906 BALANCE SHEET (Figures in $ millions) End of Year Start of Year Assets Cash and marketable securities $ 94 $ 163 Receivables 2,632 2,590 Inventories 212 263 Other current assets 892 957 Total current assets $ 3,830 $ 3,973 Net property, plant, and equipment 20,023 19,965 Other long-term assets 4,266 3,820 Total assets $ 28,119 $ 27,758 Liabilities and shareholders’ equity Payables $ 2,614 $ 3,090 Short-term debt 1,444 1,598 Other current liabilities 836 812 Total current liabilities $ 4,894 $ 5,500 Long-term debt and leases 5,773 5,938 Other long-term liabilities 6,228 6,199 Shareholders’ equity 11,224 10,121 Total liabilities and shareholders’ equity $ 28,119 $ 27,758 Calculate the following financial ratios for Phone Corporation: (Use 365 days in a year. Do not round intermediate calculations. Round your final answers to 2 decimal places.) g. operating profit margin h. long-term debt ration (use end-of-year balance sheet figures) i. total debt ratio (use end-of-year balance sheet figures)
Here are simplified financial statements for Phone Corporation in a recent year: INCOME STATEMENT (Figures in $ millions) Net sales $ 13,600 Cost of goods sold 4,310 Other expenses 4,162 Depreciation 2,668 Earnings before interest and taxes (EBIT) $ 2,460 Interest expense 710 Income before tax $ 1,750 Taxes (at 30%) 525 Net income $ 1,225 Dividends $ 906 BALANCE SHEET (Figures in $ millions) End of Year Start of Year Assets Cash and marketable securities $ 94 $ 163 Receivables 2,632 2,590 Inventories 212 263 Other current assets 892 957 Total current assets $ 3,830 $ 3,973 Net property, plant, and equipment 20,023 19,965 Other long-term assets 4,266 3,820 Total assets $ 28,119 $ 27,758 Liabilities and shareholders’ equity Payables $ 2,614 $ 3,090 Short-term debt 1,444 1,598 Other current liabilities 836 812 Total current liabilities $ 4,894 $ 5,500 Long-term debt and leases 5,773 5,938 Other long-term liabilities 6,228 6,199 Shareholders’ equity 11,224 10,121 Total liabilities and shareholders’ equity $ 28,119 $ 27,758 Calculate the following financial ratios for Phone Corporation: (Use 365 days in a year. Do not round intermediate calculations. Round your final answers to 2 decimal places.) g. operating profit margin h. long-term debt ration (use end-of-year balance sheet figures) i. total debt ratio (use end-of-year balance sheet figures)
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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Here are simplified financial statements for Phone Corporation in a recent year:
INCOME STATEMENT | ||
(Figures in $ millions) | ||
Net sales | $ | 13,600 |
Cost of goods sold | 4,310 | |
Other expenses | 4,162 | |
2,668 | ||
Earnings before interest and taxes (EBIT) | $ | 2,460 |
Interest expense | 710 | |
Income before tax | $ | 1,750 |
Taxes (at 30%) | 525 | |
Net income | $ | 1,225 |
Dividends | $ | 906 |
BALANCE SHEET | |||||||
(Figures in $ millions) | |||||||
End of Year | Start of Year | ||||||
Assets | |||||||
Cash and marketable securities | $ | 94 | $ | 163 | |||
Receivables | 2,632 | 2,590 | |||||
Inventories | 212 | 263 | |||||
Other current assets | 892 | 957 | |||||
Total current assets | $ | 3,830 | $ | 3,973 | |||
Net property, plant, and equipment | 20,023 | 19,965 | |||||
Other long-term assets | 4,266 | 3,820 | |||||
Total assets | $ | 28,119 | $ | 27,758 | |||
Liabilities and shareholders’ equity | |||||||
Payables | $ | 2,614 | $ | 3,090 | |||
Short-term debt | 1,444 | 1,598 | |||||
Other current liabilities | 836 | 812 | |||||
Total current liabilities | $ | 4,894 | $ | 5,500 | |||
Long-term debt and leases | 5,773 | 5,938 | |||||
Other long-term liabilities | 6,228 | 6,199 | |||||
Shareholders’ equity | 11,224 | 10,121 | |||||
Total liabilities and shareholders’ equity | $ | 28,119 | $ | 27,758 | |||
Calculate the following financial ratios for Phone Corporation: (Use 365 days in a year. Do not round intermediate calculations. Round your final answers to 2 decimal places.)
g. operating profit margin
h. long-term debt ration (use end-of-year balance sheet figures)
i. total debt ratio (use end-of-year balance sheet figures)
j. times interest earned
k. cash coverage ratio
l.
m. quick ratio (use end-of-year balance sheet figures)
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