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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FINAN&MANAGERIAL ACCT (LL)W/1TERM ACCESS
- Problem 1: Viance Queen Company Required: Compute for the company’s profitability and operating efficiency ratios for 2019 Compute for the financial health ratios of the company for 2019 A.Profitability ratio a.Gross Profit Ratio b. Operating income margin c. Net profit margin d. Return on Assets: ROA (NI/Total Assets) ROA (NI/Average Assets) ROA (EBIT/Total Assets) ROA (EBIT/Average Assets) ROE (NI/Capital) ROE (NI/Average Capital B.Operating Efficiency a. Asset Turnover b. Fixed Asset Turnover c. Inventory Turnover d. Days in Inventory e. AR Turnover f. Days in AR C.Financial Health/ (Solvency and Liquidity) Solvency ratio: a. Debt to equity ratio b. Debt Ratio c. Equity Ratio d. Interest Coverage Ratio Liquidity ratio: a. Current Ratio b. Quick Ratioarrow_forwardRevenues Cost of goods sold Earnings Total assets Shareholders equity Coca-Cola $41,866 16,456 6,536 87,274 23,050 Pepsico $62,806 28,211 6,324 74,140 11,252 Keurig Dr Pepper $6,435 2,591 849 9,800 2,130arrow_forwardEdison 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_forward
- Saved 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_forwardProblem 1: Viance Queen Company Required: Compute for the company’s profitability and operating efficiency ratios for 2019 Compute for the financial health ratios of the company for 2019 A.Profitability ratio Return on Assets: ROA (EBIT/Average Assets) ROE (NI/Capital) ROE (NI/Average Capitalarrow_forwardCompute the following profitability ratios of the company for the most recent two years, show all values in the computations: 1.Asset Turnover 2.Profit margin ratio(Net Income/Net Sales) 3.Return on total assets (Net Income/Average Total Assets) 4.Return on stockholders’ equity 5.Basic Earnings per share (EPS) Based on the results above, what conclusions can you make about the company’s overall profitability and efficient use of assets?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_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_forwardVII. Direction: Compute and interpret. The following comparative financial statements are provided by Avatar Industries. You were asked to compute the different financial ratios and provide your interpretations with regards to profitability, efficiency, liquidity and solvency of the company. Use the Answer Sheet template below to input your answer and solution. AVATAR INDUSTRIES AVATAR INDUSTRIES Comparative Statement of Financial Position For the years 2019 and 2018 Comparative Income Statement For the years 2019 and 2018 2019 2018 2019 2018 ASSETS Current Assets: Sales P200,000 P210,000 Cash & Cash Equivalent P65,000 P70,000 Sales Returns and Allowances 40,000 25,000 Accounts Receivable 40,000 35,000 Net Sales 160,000 185,000 Marketable Secuities 40,000 35,000 Cost of Goods Sold 100,000 115,625 Inventory 100,000 80,000 Gross Profit 60,000 69,375 Total Current Assets 220,000 200,000 160,000 P445,000 P380,000 245,000 Operating Expenses: Fixed Assets Selling Expenses 22,000 25,000 Total…arrow_forward
- VII. Direction: Compute and interpret. The following comparative financial statements are provided by Avatar Industries. You were asked to compute the different financial ratios and provide your interpretations with regards to profitability, efficiency, liquidity and solvency of the company. Use the Answer Sheet template below to input your answer and solution. AVATAR INDUSTRIES AVATAR INDUSTRIES Comparative Statement of Financial Position For the years 2019 and 2018 Comparative Income Statement For the years 2019 and 2018 2019 2018 2019 2018 ASSETS Current Assets: Sales P200,000 P210,000 Cash & Cash Equivalent P65,000 P70,000 Sales Returns and Allowances 40,000 25,000 Accounts Receivable 40,000 35,000 Net Sales 160,000 185,000 Marketable Securities 40,000 35,000 Cost of Goods Sold 100,000 115,625 Inventory 100,000 80,000 Gross Profit 60,000 69,375 Total Current Assets 245,000 220,000 Operating Expenses: Fixed Assets 200,000 160,000 Selling Expenses 22,000 25,000 Total Assets P445,000…arrow_forwardDuPont system of analysis Use the following financial information for AT&T and Verizon to conduct a DuPont system of analysis for each company. Sales Earnings available for common stockholders Total assets Stockholders' equity a. Which company has the higher net profit margin? Higher asset turnover? b. Which company has the higher ROA? The higher ROE? c. Which company has the higher financial leverage multiplier? a. Net profit margin (Round to three decimal places.) AT&T Net profit margin AT&T $164,000 13,333 403,921 201,934 Verizon Verizon $126,280 13,608 244,280 24,232arrow_forwardComputing 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_forward
- Financial Accounting: The Impact on Decision Make...AccountingISBN:9781305654174Author:Gary A. Porter, Curtis L. NortonPublisher:Cengage Learning