a.
Introduction:
Requirement 1
Total amount of assets invested in A and G in the current year.
b.
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 2
The return on assets of the company for the current year of A and G.
c.
Introduction: Expenses are incurred to generate revenues and thus, form an essential part of the income statement.
Requirement 3
The total expenses of the A and G company for the current year.
d.
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 4
The A’s and G’s return on assets for the current year is better or worse than the competitor’s average return.
e.
Introduction: Investors greatly rely on financial or accounting ratios along with the financial statements before making decisions for investing in a particular company. The limitations of financial statements can be removed by incorporating the ratios into the analysis and making investment decisions.
Requirement 5
Whether one should invest in G or A company based on return on assets.
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FINANCIAL AND MANAGERIAL ACC VOL 2 W/CON
- Calculate the profit margin, basic earning power (BEP), return on assets (ROA), and return on equity (ROE). How has the company’s profitability changed during the last year? A computer manufacturer has financial statements as follows: Income Statements for Year Ending December 31 (Thousands of Dollars) 2019 2018 Sales $945,000 $900,000 Expenses excluding depreciation and amortization 812,700 774,000 EBITDA $132,300 $126,000 Depreciation and amortization 33,100 31,500 EBIT $99,200 $94,500 Interest Expense 10,470 8,600 EBT $88,730 $85,900 Taxes (25%) 22,183 21,475 Net income $66,547 $64,425 Common dividends $56,609 $54,115 Addition to retained earnings $9,938 $10,310 Balance Sheets for Year Ending December 31 (Thousands of Dollars) Assets 2019 2018 Cash and…arrow_forwardWorking with the Takeaways throughout this chapter we have considered the financial statements of Apple Inc. and have undertaken select financial analysis using the Takeaways. Utilize these same tools to analyze the financial data of Logitech International, a manufacturer of computer peripherals. The following information was reported by Logitech in the company’s financial statements as of year-end March 31, 2017 and 2016.1. Calculate the return on sales ratio for each year and comment on Logitech’s profitability.2. Calculate the current ratio for each year and comment on Logitech’s liquidity.3. Calculate the debt-to-total-assets ratio for each year and comment on Logitech’s solvency. 4. Calculate the free cash flow for each year and comment on what this means for Logitech. 5. Apple’s fiscal year-end occurs near the end of September, whereas Logitech uses a March year-end. How might this affect a comparison of the financial results of the two companies?arrow_forwardCompute returns on assets for AT&T and Verizon and answer the question below. Be sure to show your work. Key figures($ millions). AT&T Verizon Sales 126,723 110,875 Net Income 4,184 10,198 Average Assets 269,868 225,233 AT&T Verizon Which company is more successful in returning net income from its assets invested?arrow_forward
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