a.
Introduction: The return on assets is a financial ratio which states that how profitably a company has employed its assets. In other words, how the company has utilized its assets to generate income.
Requirement 1
The return on assets for companies C and P.
b.
Introduction: Comparison between similar companies in the same industry is crucial to the assessment of the company’s performance. A company’s financial data in absolute form can be useful measures if the same data is used to compare its rival company or competitors.
Requirement 2
Which of the two companies C and P is more successful in terms of the total amount of sales to customers?
c.
Introduction: Comparison between similar companies in the same industry is crucial to the assessment of the company’s performance. A company’s financial ratios, when compared with the industry data, can reveal lots of valuable information which the financial statements can not reveal.
Requirement 3
Which company has been more successful in terms of generating a net income from its total asset investment?
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FIN+MAN ACCOUNTING (LL) W/ ACCESS CODE
- Edison Company reported the following for the current year: $ 84,000 59,000 21,080 63,000 77,080 Net sales Cost of goods sold Net income Beginning balance of total assets Ending balance of total assets Compute (a) profit margin and (b) return on total assets. Complete this question by entering your answers in the tabs below. Profit Margin Ratio Compute the return on total assets. Return On Total Assets Numerator: 7 7 7 Return On Total Assets Denominator: = Return On Total Assets Return on total assets II =arrow_forwardSaved Help Edison Co. reported the following for the current year: Net sales Cost of goods sold Net income Beginning balance of total assets Ending balance of total assets $80,000 $56,000 $16,000 $60,000 $68,000 Compute (a) profit margin and (b) return on total assets. Complete this question by entering your answers in the tabs below. Profit Margin Ratio Return On Total Assets Compute the return on total assets. Return On Total Assets Choose Denominator: Choose Numerator: Return On Total Assets Return on total assets < Profit Margin Ratio Relue O Te Asesie < Prev 7 of 7 Next ere to search a 米 *5 # & * 4 8. W E R Y S G J K LL %24arrow_forwardActivity Ratios Provide brief definition of what Activity ratios mean to the profitability of a company. What are the differences between Apple and Samsung in relationship to the ratios? See attached for ratios Total Asset Turnover Inventory Turnover Fixed Asset turnover Receivable Turnover 3. What does it mean to the company’s profitability? Is it good or bad?arrow_forward
- Create a comparative financial statement from the following:arrow_forwardPrepare common size income statements Which company earns more net income? Which companies net income has a higher percentage of its net sales revenue?arrow_forwardComparison:1. Observe the trend of revenues for both companies. Which company has higher revenue?2. Observe the gross margin for both companies. Which company is more profitable?3. Observe the operating expenses for both companies. Which company has more operating expenses?4. Observe the net income for both companies. Which company is more profitable?5. Which company is more profitable using this type of analysis?arrow_forward
- THE COCA-COLA COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (In millions except per share data) Year Ended December 31, Net Operating Revenues Cost of goods sold Gross Profit Selling, general and administrative expenses 2019 2018 2017 37,266 S 34,300 S 36,212 14,619 13,067 13,721 22,647 21,233 22,491 12,103 11,002 12,834 458 1,079 1,902 Other operating charges 10,086 9,152 7,755 Operating Income Interest income 563 689 679 946 950 853 Interest expense Equity income (loss)-net 1,049 1,008 1,072 34 (1,674) (1,763) Other income (loss)- net 10,786 8,225 6,890 Income Before Income Taxes 1,801 1,749 5,607 Income taxes 8,985 6,476 1,283 Consolidated Net Income 42 35 Less: Net income (loss) attributable to noncontrolling interests Net Income Attributable to Shareowners of The Coca-Cola Company 65 8,920 S 6,434 S 1,248 2.09 S 1.51 $ 0.29 Basic Net Income Per Share 2.07 S 1.50 $ 0.29 Diluted Net Income Per Shard 4,276 4,259 4,272 Average Shares Outstanding- Basic 38 40 52 Effect of…arrow_forwardVertical analysis (common-size) percentages for Baker Company’s sales revenue, cost of goods sold, and expenses are as follows. Did Baker’s net income as a percent of sales increase, decrease, or remain unchanged over the 3-year period? Provide numerical support for your answer. Vertical Analysis 2018 2017 2016 Sales revenue 100.0% 100.0% 100.0% Cost of goods sold 60.0 63.9 65.0 Expenses 26.0 26.6 27.5arrow_forwardThe 2024 income statement of Adrian Express reports sales of $20,310,000, cost of goods sold of $12,500,000, and net income of $1,900,000. Balance sheet information is provided in the following table. Assets Current assets: Cash Accounts receivable Inventory ADRIAN EXPRESS Balance Sheets December 31, 2024 and 2023 Long-term assets Total assets Liabilities and Stockholders' Equity Current liabilities Long-term Liabilities Common stock Retained earnings Total liabilities and stockholders' equity Industry averages for the following four risk ratios are as follows: Gross profit ratio Return on assets Profit margin Asset turnover Return on equity 45% 25% 15% 6.5 35% tines 2024 2023 $800,000 $910,000 1,725,000 1,175,000 2,175,000 1,625,000 5,000,000 4,390,000 $9,700,000 $8,100,000 $2,030,000 $1,820,000 2,490,000 2,560,000 2,025,000 1,975,000 3,155,000 1,745,000 $9,700,000 $8,100,000arrow_forward
- Computing and Interpreting Financial Statement Ratios Following are selected ratios of Norfolk Southern for 2018 and 2017. Return on Assets (ROA) Component 2018 2017 Profitability (Net income/Sales) 25.3% 53.2% Productivity (Sales/Average assets) 0.338 0.319 a. Was the company profitable in 2018?Answer b. Was the company more profitable in 2018 or 2017?Answer c. Is the change in productivity a positive or negative development?Answer d. Compute the company’s ROA for 2018 and for 2017. Note: Round answers to one decimal places (example: 10.4%). ROA 2018 Answer 2017 Answer e. From the information provided, which of the following best explains the change in ROA during 2018? Answerarrow_forwardQuestion 2Alex is currently considering to invest his money in one of the companies between Company A and Company B. The summarized final accounts of the companies for their last completed financial year are as follows: a. Calculate the following ratios for Company A and Company B. State clearly the formulae used for each ratio: i. Gross Profit Marginii. Net Profit Marginiii. Inventory Turnover Period (days)iv. Receivables Collection Period (days)arrow_forwardSee Image for Information Compute the following performance indices for both companies: Profit margin Asset turnover Return on Capital Employed (ROCE) Current ratio Debt equity ratio Compare and analyse the performance of the two companies computed in (1) above and explain what the board of Box Limited needs to do to achieve their objective . c. Which other non-financial measures can influence the decision of the board of Box Limited?arrow_forward
- Principles of Accounting Volume 2AccountingISBN:9781947172609Author:OpenStaxPublisher:OpenStax CollegeFinancial Accounting: The Impact on Decision Make...AccountingISBN:9781305654174Author:Gary A. Porter, Curtis L. NortonPublisher:Cengage Learning