Here are simplified financial statements of Phone Corporation from a recent year: INCOME STATEMENT (Figures in millions of dollars) 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 of dollars) 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 Phone Corp.’s stock price was $89 at the end of the year. There were 210 million shares outstanding. a. What was the company’s market capitalization and market value added? (Enter your answers in billions rounded to 2 decimal places.) Market capitalization $ billion Market value added $ billion b. What was its market-to-book ratio? (Round your answer to 2 decimal places.) Market-to-book ratio

Here are simplified financial statements of Phone Corporation from a recent year: INCOME STATEMENT (Figures in millions of dollars) 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 of dollars) 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 Phone Corp.’s stock price was $89 at the end of the year. There were 210 million shares outstanding. a. What was the company’s market capitalization and market value added? (Enter your answers in billions rounded to 2 decimal places.) Market capitalization $ billion Market value added $ billion b. What was its market-to-book ratio? (Round your answer to 2 decimal places.) Market-to-book ratio

Financial Accounting

15th Edition

ISBN:9781337272124

Author:Carl Warren, James M. Reeve, Jonathan Duchac

Publisher:Carl Warren, James M. Reeve, Jonathan Duchac

Chapter3: The Adjusting Process

Section: Chapter Questions

Problem 29E

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Here are simplified financial statements of Phone Corporation from a recent year:

INCOME STATEMENT (Figures in millions of dollars)
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 of dollars)
	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

Phone Corp.’s stock price was $89 at the end of the year. There were 210 million shares outstanding.

a.	What was the company’s market capitalization and market value added? (Enter your answers in billions rounded to 2 decimal places.)


Market capitalization	$ billion
Market value added	$ billion

b.	What was its market-to-book ratio? (Round your answer to 2 decimal places.)

Market-to-book ratio

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