1.
Introduction: The amount of total assets is always equal to the total liabilities and shareholder’s equity of the company. Total assets include current and non-current assets while total liabilities include current liabilities and non-current liabilities.
The total amount of assets of (a) Company A and (b) Company G for the current year.
1.
Answer to Problem 2AA
- Total amount of assets of current year of Company A is $375,319.
- Total amount of assets of current year of Company G is $197,295.
Explanation of Solution
Total assets arethe same as the total liabilities of the company.
Here, total liabilities arethe sum of shareholder’s equity and total liabilities which is $375,319for Company A and $197,295 for Company G.
Therefore, amount of total assets is:
(a) $375,319 and (b) $197,295
2.
Introduction: Return on asset shows the efficiency of the managers to utilize the assets of the company to have good returns on it. It helps to understand the company’s position in the market.
The return on assets for the current year of (a) Company A and (b) Company G.
2.
Answer to Problem 2AA
- The return on assets for the current year is 13.87% for Company A.
- The return on asset for the current year is 6.94% for Company G.
Explanation of Solution
Total assets arethe same as total liabilities.
- So, total assets for the current year are $375,319 and for the previous year is $321,686for Company A.
- Total assets for the current year are $197,295 and for the previous year is $167,497 for Company G.
Return on assets:
Return on assets:
3.
Introduction:Total expenses of the company includes the expenditures which are must for operations of the company to generate income. Thus, income and expenses are related to each other. Net income is calculated by subtracting the expenses from the revenues of the company.
The total expenses of the (a) Company A and (b) Company G for the current year.
3.
Answer to Problem 2AA
- The total expense for the current year is $180,883.
- The total expense for the current year is $98,193.
Explanation of Solution
Net income is generated by subtracting the expenses of the company from its revenue.
- So, to calculate the total expenses, net income should be subtracted from the revenues of company A.
- So, to calculate the total expenses, net income should be subtracted from the revenues of company G.
4.
Introduction: Return on asset shows the efficiency of the managers to utilize the assets of the company to have good returns on it. It helps to understand the company’s position in the market.
To compare: The return on asset of company A and Company G with the market average return which is 10%.
4.
Explanation of Solution
The market average return on asset is 10%.
- Return on asset of company A is 13.87%.
- Return on asset of company G is 6.94%.
Thus, Company A’s return on asset is better than the market’s return on asset. Therefore, it can be said that company A is performing very good in its industry and is expected to have good returns on its investment too.
Thus, Company G’s return on asset is worse than the market’s return on asset. Therefore, it can be said that company G is not performing well in its industry and is expected to have lower returns on its investment too.
5.
Introduction: Return on asset shows the efficiency of the managers to utilize the assets of the company to have good returns on it. It helps to understand the company’s position in the market.
The company with good returns for investment.
5.
Explanation of Solution
Returns on investment depend upon the return on assets ratios of the company. Return on assets shows the capacity of the company to convert its assets into income. A high ratio indicates the good efficiency of the company. Higher the ratio,the higher the returns.
Return on assets of Company A is 13.87% while Company G is 6.94%. Thus, one would invest in Company A as this company has a capacity to give higher returns on the investment.
Want to see more full solutions like this?
Chapter 1 Solutions
FINANCIAL ACCOUNTING FUNDAMENTALS W/ CO
- Compute 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_forwardCalculate 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_forwardThe following information is available for Advanced Micro Devices (AMD) and Intel for the current year. • AMD’s assets increased by $803 million and its liabilities increased by $267 million.• Intel’s assets increased by $3,771 million and its liabilities decreased by $664 million. a. Complete the following table. Stockholders' Assets Assets Liabilities Liabilities equity $ millions Beg. of year End of year Beg. of year End of year End of year Advanced Micro Devices Answer $3,645 $2,365 Answer Answer Intel $98,599 Answer Answer $42,720 Answer b. Calculate average assets for each company. Round your answers to the nearest million, if applicable. $ millions Avg. Assets Advanced Micro Devices Answer Intel Answer c. Which company has the larger proportion of its assets financed by the company’s owners at year-end?arrow_forward
- The following information is available for Advanced Micro Devices (AMD) and Intel for the current year. • AMD’s assets increased by $1,205 million and its liabilities increased by $401 million.• Intel’s assets increased by $5,657 million and its liabilities decreased by $996 million. a. Complete the following table. Stockholders' Assets Assets Liabilities Liabilities equity $ millions Beg. of year End of year Beg. of year End of year End of year Advanced Micro Devices Answer $5,467 $3,547 Answer Answer Intel $147,899 Answer Answer $64,080 Answer b. Calculate average assets for each company. Round your answers to the nearest million, if applicable. $ millions Avg. Assets Advanced Micro Devices Answer Intel Answer c. Which company has the larger proportion of its assets financed by the company’s owners at year-end?AnswerAdvanced Micro DevicesIntel Please answer all parts of the question.arrow_forwardThe following information is available for Advanced Micro Devices (AMD) and Intel for the current year. • AMD’s assets increased by $1,205 million and its liabilities increased by $401 million.• Intel’s assets increased by $5,657 million and its liabilities decreased by $996 million. a. Complete the following table. Stockholders' Assets Assets Liabilities Liabilities equity $ millions Beg. of year End of year Beg. of year End of year End of year Advanced Micro Devices Answer $5,467 $3,547 Answer Answer Intel $147,899 Answer Answer $64,080 Answerarrow_forwardGiven the income statement below, Mega Trade Inc. wants to find the resulting net income for the year 2018 (in million). What is the right amount? Income Statement ($ Million) YEAR END YEAR END YEAR END YEAR END 2015 2016 2017 2018 Sales 1,234.90 1,251.70 1,300.40 1,334.40 Cost Sales -679.1 -659 -681.3 -667 Gross Operating Income Selling & Administration -339.7 -348.6 -351.2 -373.3 Depreciation -47.5 -52 -55.9 -75.2 Other Income/Expenses 11.8 7.6 7 8.2 Earnings Before Interest and Taxes Interest Income 1.3 1.4 1.7 2 Interest Expense -16.2 -15.1 -20.5 -23.7 Pre Tax Income Income Taxes -56.8 -64.2 -67.5 -72.6 Net Income Dividends -38.3 -38.7 -39.8 -40.1 Addition to Retained Earningsarrow_forward
- Given the income statement below, Mega Trade Inc. wants to find the resulting net income for the year 2016 (in million). What is the right amount? Income Statement ($ Million) YEAR END YEAR END YEAR END YEAR END 2015 2016 2017 2018 Sales 1,234.90 1,251.70 1,300.40 1,334.40 Cost Sales -679.1 -659 -681.3 -667 Gross Operating Income Selling & Administration -339.7 -348.6 -351.2 -373.3 Depreciation -47.5 -52 -55.9 -75.2 Other Income/Expenses 11.8 7.6 7 8.2 Earnings Before Interest and Taxes Interest Income 1.3 1.4 1.7 2 Interest Expense -16.2 -15.1 -20.5 -23.7 Pre Tax Income Income Taxes -56.8 -64.2 -67.5 -72.6 Net Income Dividends -38.3 -38.7 -39.8 -40.1arrow_forwardCompute the recent two years’ cash flow on total assets ratios for apple and googlearrow_forwardOffice Depot, Inc. is one of the largest suppliers of office products in the United States. Suppose it had net income of $738.7 million and sales of $50,000 million in 2020 Its total assets were $13,073.1 million at the beginning of the year and $13,717.3 million at the end of the year. What is Office Depot, Inc.’s (a) asset turnover and (b) profit margin? (Round to two decimals.) Provide a brief interpretation of your results.arrow_forward
- Given the income statement below, Mega Trade Inc. wants to find the resulting net income for the year 2018 (in million). What is the right amount? Income Statement ($ Million) Year End 2015 2016 2017 2018 Sales 1,234.90 1,251.70 1,300.40 1,334.40 Cost of Sales -679.1 -659 -681.3 -667 Selling & Administration -339.7 -348.6 -351.2 -373.3 Depreciation -47.5 -52 -55.9 -75.2 Other Income/Expenses 11.8 7.6 7 8.2 Interest Income 1.3 1.4 1.7 2 Interest Expense -16.2 -15.1 -20.5 -23.7 Income Taxes -56.8 -64.2 -67.5 -72.6 Dividends -38.3 -38.7 -39.8 -40.1 CHOICES: A. 108.7B. 132.7C. No choice givenD. 132.8E. 121.8arrow_forwardIn the income statement below, ABC Trade Inc. wants to find the resulting net income for the year 2018 (in million). What is the right amount? Income Statement ($ Million) Year End 2015 2016 2017 2018 Sales 1,234.90 1,251.70 1,300.40 1,334.40 Cost of Sales (679.10) (659.00) (681.30) (667.00) Gross Operating Income Selling & Administration (339.70) (348.60) (351.20) (373.30) Depreciation (47.50) (52.00) (55.90) (75.20) Other Income/Expenses 11.80 7.60 7.00 8.20 Earnings Before Interest and Taxes Interest Income 1.30 1.40 1.70 2.00 Interest Expense (16.20) (15.10) (20.50) (23.70) Pre Tax Income Income Taxes (56.80) (64.20) (67.50) (72.60) Net Income Dividends (38.30) (38.70) (39.80) (40.10) Addition to Retained Earnings Group of answer choices 121.8 108.7 132.7 132.8 No choice givenarrow_forwardButterfly Tractors had $15.50 million in sales last year. Cost of goods sold was $8.30 million, depreciation expense was $2.30 million, interest payment on outstanding debt was $1.30 million, and the firm’s tax rate was 21%. What was the firm’s net income? Note: Enter your answer in millions rounded to 2 decimal places. What was the firm’s cash flow? Note: Enter your answer in millions rounded to 2 decimal places. What would happen to net income and cash flow if depreciation were increased by $1.30 million? Note: Enter your numeric answers in millions rounded to 2 decimal places. Select "unaffected" if the results do not affect the balance. Would you expect the change in depreciation to have a positive or negative impact on the firm’s stock price? What would be the impact on net income if depreciation was $1 million and interest expense was $2 million? What would be the impact on cash flow if depreciation was $1.30 million and interest expense was $2.30 million? Note: Enter your…arrow_forward
- Managerial Accounting: The Cornerstone of Busines...AccountingISBN:9781337115773Author:Maryanne M. Mowen, Don R. Hansen, Dan L. HeitgerPublisher:Cengage LearningFinancial And Managerial AccountingAccountingISBN:9781337902663Author:WARREN, Carl S.Publisher:Cengage Learning,Century 21 Accounting Multicolumn JournalAccountingISBN:9781337679503Author:GilbertsonPublisher:Cengage
- Intermediate Financial Management (MindTap Course...FinanceISBN:9781337395083Author:Eugene F. Brigham, Phillip R. DavesPublisher:Cengage Learning