![MANAGERIAL ACCOUNTING FUND. W/CONNECT](https://www.bartleby.com/isbn_cover_images/9781259688713/9781259688713_largeCoverImage.gif)
Concept introduction:
Financial Statement analysis is done using the components of financial statement. These components are
Common Size Financial Statement: Common Size Analysis is prepared as % format which shows readymade analysis for the financial statements. For the Income statement the common size format shows all the amounts as a % of sales revenue and for the Balance sheet the common size format shows the each items of the balance sheet as a % of the Total assets amount.
To indicate:
The Net income trend.
![Check Mark](/static/check-mark.png)
Want to see the full answer?
Check out a sample textbook solution![Blurred answer](/static/blurred-answer.jpg)
Chapter 13 Solutions
MANAGERIAL ACCOUNTING FUND. W/CONNECT
- You are a financial Manager of Chevron Corp. You need to assess the effectiveness of working capital management of the company for 2018 using the following data. What is the 2018 Receivable turnover? 2017 Account Receivable = 15,353 000 2018 Account Receivable = 15.050,00O 2017 Inventory = 5,585.000 2018 Inventory = 5 704.00O 2017 Accounts Payable= 14 565 00I 2018 Accounts Payable = 13 953 000 2017 Sales 134,674 000 2018 Sales 158.902 000. 2017 Cost of Sales = 95 114.000 2018 Cost of Sales = 113 997 000 2017 Purchases= 95 114 000 2018 PurchaSes = 123 435 000arrow_forwardCompute Liquidity and Solvency Ratios for Competing Firms Halliburton and Schlumberger compete in the oil field services sector. Refer to the following 2018 financial data for the two companies to answer the requirements. $ millions Cash and equivalents Short-term investments Accounts receivable Current assets Current liabilities Total liabilities Total equity Earnings before interest and tax (EBIT) Interest expense, gross a. Compute the following measures for both companies. Note: Round your final answers to two decimal places (for example, enter 6.78 for 6.77555). 1. Current ratio 2. Quick ratio 3. Times interest earned 4. Liabilities-to-equity HAL SLB $2,008 $1,433 1,344 5,077 7,645 11,151 15,731 4,658 13,081 16,438 33,921 9,258 35,488 2,393 2,959 554 537 HAL 2.28 x 1.5 x 4.54 x 1.69 * SLB 1.114 x 0.79 x 5.79 * 0.91 x b. Which company appears more liquid? HAL c. Which company appears more solvent? SLB =arrow_forwardRead the instructions below and see the attached balance sheet of moon and star cooperation to support your answer. Moon Corporation and Star Corporation are in the same line of business and both were recently organized, so it may be assumed that the recorded costs for assets are close to current market values. The balance sheets for the two companies are as follows at July 31, 2011: Instructions a. Assume that you are a banker and that each company has applied to you for a 90-day loan of $12,000. Which would you consider to be the more favorable prospect? Explain your answer fully. b. Assume that you are an investor considering purchasing all the capital stock of one or both of the companies. For which business would you be willing to pay the higher price? Do you see any indication of a financial crisis that you might face shortly after buying either company? Explain your answer fully. (For either decision, additional information would be useful, but you are to reach your decision on…arrow_forward
- The Table also provides financial indicators for the chemical and related products industry (Chemicals and Allied Products) for the year 2018. This will allow you to compare the performance of both firms J & J and Merck with the industry in which they compete for the same year. Do you understand that the performance of firms is superior to the average performance of their competitors in the market? Justify your answer. What adjustments or changes would you recommend to make each of the firms more attractive to shareholders and others interested in them? Justify your answer. Company Name: Year 2018 Chemicals and Allied Products Industry Ratios ………….. Solvency or Debt Ratios Merck J&J 2018 Debt ratio 0.67 0.61 0.47 Debt-to-equity ratio 0.93 0.51 0.38 Interest coverage ratio 12.27 18.91 -9.43 Liquidity Ratios Current ratio 1.17 1.47 3.47 Quick ratio 0.92 1.16 2.12 Cash…arrow_forward(Relateu to Checkpoint 4.3) (Ahaiyzing Proitability) in 2016, the Allen Corporation had sales of $61 million, total assets of $50 million, and total liabilities of $20 million. The interest rate on the company's debt is 6.3 percent, and its tax rate is 35 percent. The operating profit margin is 14 percent. a. Compute the firm's 2016 net operating income and net income. b. Calculate the firm's operating return on assets and return on equity. (Hint: You can assume that interest must be paid on all of the firm's liabilities.) a. Compute the firm's 2016 net operating income and net income. The firm's 2016 net operating income is $ 8.54 million. (Round to two decimal places.) The firm's 2016 net income is $ million. (Round to two decimal places.)arrow_forwardPlease find below Financial Statement extracts of Nestle from year 2017 and 2018. Based on this information please answer following question from a perspective of Financial Analyst (justify your answers with data as well the reason for choosing your ratios for your analysis) .The company's total assets at year-end 2016 were 131,900 million. What reasonable conclusions an analyst might make about the companies efficiency, Companies solvency, Liquidity and Profitability? 2018 2017 * Sales 91,439 89,590 Profit for the year 10,468 7,511 Assets 2018 2017 * Total current assets 41,003 31,884 Total assets 137,015 133,210 Total liabilities and equity 137,015 133,210arrow_forward
- The Corrigan Corporation’s 2015 and 2016 financial statements follow,along with some industry average ratios.a. Assess Corrigan’s liquidity position, and determine how it compares with peers and how the liquidity position has changed over time.b. Assess Corrigan’s asset management position, and determine how it compares with peers and how its asset management efficiency has changed over time.c. Assess Corrigan’s debt management position, and determine how it compares with peers and how its debt management has changed over time.d. Assess Corrigan’s profitability ratios, and determine how they compare with peers and how its profitability position has changed over time.e. Assess Corrigan’s market value ratios, and determine how its valuation compares with peers and how it has changed over time.f. Calculate Corrigan’s ROE as well as the industry average ROE, using the DuPont equation. From this analysis, how does Corrigan’s financial position compare with the industry average numbers?g.…arrow_forwardA Comparison of Firm Performance 1 2 2013 Financials 3 Net operating revenues 4 Cost of goods sold 5 Gross profit 6 Selling, general, and administrative expense 7 Other costs 8 Operating income 9 Interest expense 10 Other income (loss) - net 11 Income before income taxes 12 Income taxes 13 Net income 14 Assets 15 Cash and cash equivalents 16 Net receivables 17 Inventories 18 Prepaid expenses and other 19 Total current assets 20 Property, plant and equipment 21 Goodwill 22 Other assets 23 Total assets 24 Liabilities and Stockholder Equity 25 Accounts payable 26 Short-term debt 27 Total current liability 28 Long-term debt 29 Other liabilities 30 Total liabilities 31 Stockholder equity 32 B Walmart 469,162 352,488 116,674 88,873 27,801 2,251 187 25,737 7,981 17,756 7,781 6,768 43,803 1,588 59,940 116,681 20,497 5,987 203,105 59,099 12,719 71,818 41,417 113,235 89,870 C Macy's 27,931 16,725 11,206 8,440 88 2,678 388 (134) 2,156 767 1,389 1,836 371 5,308 361 7,876 8,196 3,743 1,176 20,991…arrow_forwardYou are a financial Manager of Chevron Corp. You need to assess the effectiveness of working capital management of the company for 2018 using the following data. What is the 2018 Inventory turnover? 2017 Account Receivable = 15,353,000 2018 Account Receivable = 15,050,000 2017 Inventory = 5,585,000 2018 Inventory = 5,704,000 2017 Accounts Payable = 14,565,000 2018 Accounts Payable = 13,953,000 2017 Sales = 134,674,000 2018 Sales = 158,902,000 2017 Cost of Sales = 95,114,000 2018 Cost of Sales = 113,997,000 2017 Purchases = 95,114,000 2018 Purchases = 123,435,000arrow_forward
- Use the information provided below to answer the following questions: Comment on the financial result of the company. Is the company efficient in its collection of debts arising from credit sales? Motivate your answer by using an appropriate ratio. Will creditors allow credit under distress business conditions to Silverstone Limited? Explain your answer with the relevant ratio. INFORMATION Extracts of the statement of comprehensive income and statement of financial position of Silverstone Limited for 2021 and 2020 are as follows: Statement of Comprehensive Income for the year ended 31 December: 2021 (R) 2020 (R) Sales 6 400 000 5 440 000 Cost of sales 4 000 000 3 264 000 Gross profit 2 400 000 2 176 000 Operating expenses 960 000 1 056 000 Operating profit 1 440 000 1 120 000 Profit before tax 1 280 000 1 040 000 Profit after tax 896 000 728 000 Statement of Financial…arrow_forwardAnalyze the financial statements of the company to you in terms of:1. Solvency Ratio: *Equity Ratio 2. Asset Management Ratio: *Invetory Turnover Ratio *Fixed Asset Turnover Ratio *Total Asset Turnover Ratio 3. Debt Management Ratio: *Time Interest Earned Ratio 4. Profitability Ratio: *Operating Margin *Return on Total Assets *Return on Common Equity.…arrow_forwardYou are provided with the Income Statement and the Balance Sheet of HTS software, Inc. for 2011. Required: (a) Calculate the ratios stated in the table below for HTS Software, Inc. for 2011 (b) Analyze the current financial position for the company from a time series and cross section viewpoint. (c) Break your analysis into an evaluation of the firm’s liquidity, activity, debt, profitability and market ratios. Historical and Industry Average Ratios HTS Software , Inc. Ratio 2010 2011 Industry2011 Current Ratio 2.6 — 2.7 Quick Ratio 1.8 — 1.75 Inventory Turnover 4.5 — 4.7 Average Collection Period 40days — 42 days Total Asset Turnover 1.2 — 1 Debt Ratio 20% — 21% Times Interest Earned 9 — 8.9 Gross Profit Margin 43% — 44% Operating Profit Margin 30% — 32% Net Profit Margin 20% — 21% Return on total assets 12% — 13% Return on Equity Price/Earnings Ratio…arrow_forward