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Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881

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Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881
Textbook Problem
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Identifying the Causes of Profitability Changes

The consolidated financial statements for Dowcett Shipping Corporation and

Chapter 12, Problem 98.1C, Identifying the Causes of Profitability Changes The consolidated financial statements for Dowcett , example  1

Chapter 12, Problem 98.1C, Identifying the Causes of Profitability Changes The consolidated financial statements for Dowcett , example  2

Required:

I. Evaluate Dowsett’s performance m 2019.

To determine

Financial statements help in calculating the value of the firm and also show the position of the business. Financial statement includes three statements:

1. The balance sheet (along with shareholder’s equity statement).

2. The income statement.

3. Cash flow statement.

To evaluate:

The performance of the company from the given financial statement.

Explanation

For 2018

debt management ratio1. long-term debt to equity ratio=long-term debt total equity=$1797844$1579722=1.142. Debt to equity ratio=Total liabilitiesTotal equity=$3883463$1579722=2.453. Long-term debt to total assets ratio= long-term debt Total Assets=$1797844$5463186=0.334. Debt to total assets ratio = Total liabilitiesTotal assets=$3883463$5463186=0.71

5. Return on assets =Net income +[interest expense ×( 1tax rate)]Average total assets                              =113782+[164315( 10.25)]5463186=9454.255463186=0.00176. Return on equity=net income Average equity=1137821579722=0.0727. net profit margin =Net incomenet sales=1137827550060=0.015

For 2019

debt management ratio1

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