Here are simplified financial statements for Phone Corporation in a recent year: INCOME STATEMENT (Figures in $ millions) Net sales $ 13,700 Cost of goods sold 4,360 Other expenses 4,047 Depreciation 2,698 Earnings before interest and taxes (EBIT) $ 2,595 Interest expense 715 Income before tax $ 1,880 Taxes (at 35%) 658 Net income $ 1,222 Dividends $ 916 BALANCE SHEET (Figures in $ millions) End of Year Start of Year Assets Cash and marketable securities $ 95 $ 164 Receivables 2,682 2,610 Inventories 217 268 Other current assets 897 962 Total current assets $ 3,891 $ 4,004 Net property, plant, and equipment 20,033 19,975 Other long-term assets 4,276 3,830 Total assets $ 28,200 $ 27,809 Liabilities and shareholders’ equity Payables $ 2,624 $ 3,100 Short-term debt 1,449 1,603 Other current liabilities 841 817 Total current liabilities $ 4,914 $ 5,520 Long-term debt and leases 5,524 5,759 Other long-term liabilities 6,238 6,209 Shareholders’ equity 11,524 10,321 Total liabilities and shareholders’ equity $ 28,200 $ 27,809 Calculate the following financial ratios for Phone Corporation: (Use 365 days in a year. Do not round intermediate calculations. Round your percentage answers "Return on equity", "Return on assets", Return on capital" and "Operating profit margin" to 2 decimal places and the rest to 2 decimal places.) Return on equity (Use ending equity) % Return on assets (Use after-tax operating income and ending assets.) % Days in inventory (Use ending inventory.) days Inventory turnover (Use ending inventory.) Average collection period (Use ending receivables.) days Operating profit margin (Use after-tax operating income.) % Recievable Turnover Asset Turnover

Here are simplified financial statements for Phone Corporation in a recent year: INCOME STATEMENT (Figures in $ millions) Net sales $ 13,700 Cost of goods sold 4,360 Other expenses 4,047 Depreciation 2,698 Earnings before interest and taxes (EBIT) $ 2,595 Interest expense 715 Income before tax $ 1,880 Taxes (at 35%) 658 Net income $ 1,222 Dividends $ 916 BALANCE SHEET (Figures in $ millions) End of Year Start of Year Assets Cash and marketable securities $ 95 $ 164 Receivables 2,682 2,610 Inventories 217 268 Other current assets 897 962 Total current assets $ 3,891 $ 4,004 Net property, plant, and equipment 20,033 19,975 Other long-term assets 4,276 3,830 Total assets $ 28,200 $ 27,809 Liabilities and shareholders’ equity Payables $ 2,624 $ 3,100 Short-term debt 1,449 1,603 Other current liabilities 841 817 Total current liabilities $ 4,914 $ 5,520 Long-term debt and leases 5,524 5,759 Other long-term liabilities 6,238 6,209 Shareholders’ equity 11,524 10,321 Total liabilities and shareholders’ equity $ 28,200 $ 27,809 Calculate the following financial ratios for Phone Corporation: (Use 365 days in a year. Do not round intermediate calculations. Round your percentage answers "Return on equity", "Return on assets", Return on capital" and "Operating profit margin" to 2 decimal places and the rest to 2 decimal places.) Return on equity (Use ending equity) % Return on assets (Use after-tax operating income and ending assets.) % Days in inventory (Use ending inventory.) days Inventory turnover (Use ending inventory.) Average collection period (Use ending receivables.) days Operating profit margin (Use after-tax operating income.) % Recievable Turnover Asset Turnover

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

Here are simplified financial statements for Phone Corporation in a recent year:

INCOME STATEMENT (Figures in $ millions)
Net sales	$ 13,700
Cost of goods sold	4,360
Other expenses	4,047
Depreciation	2,698

Earnings before interest and taxes (EBIT)	$ 2,595
Interest expense	715

Income before tax	$ 1,880
Taxes (at 35%)	658

Net income	$ 1,222
Dividends	$ 916

BALANCE SHEET
(Figures in $ millions)
	End of Year		Start of Year
Assets
Cash and marketable securities	$	95		$	164
Receivables		2,682			2,610
Inventories		217			268
Other current assets		897			962

Total current assets	$	3,891		$	4,004
Net property, plant, and equipment		20,033			19,975
Other long-term assets		4,276			3,830

Total assets	$	28,200		$	27,809

Liabilities and shareholders’ equity
Payables	$	2,624		$	3,100
Short-term debt		1,449			1,603
Other current liabilities		841			817

Total current liabilities	$	4,914		$	5,520
Long-term debt and leases		5,524			5,759
Other long-term liabilities		6,238			6,209
Shareholders’ equity		11,524			10,321

Total liabilities and shareholders’ equity	$	28,200		$	27,809

Calculate the following financial ratios for Phone Corporation: (Use 365 days in a year. Do not round intermediate calculations. Round your percentage answers "Return on equity", "Return on assets", Return on capital" and "Operating profit margin" to 2 decimal places and the rest to 2 decimal places.)

Return on equity (Use ending equity)		%
Return on assets (Use after-tax operating income and ending assets.)		%
Days in inventory (Use ending inventory.)		days
Inventory turnover (Use ending inventory.)
Average collection period (Use ending receivables.)		days
Operating profit margin (Use after-tax operating income.)		%
Recievable Turnover
Asset Turnover

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