Financial Accounting
9th Edition
ISBN: 9781259222139
Author: Robert Libby, Patricia Libby, Frank Hodge Ch
Publisher: McGraw-Hill Education
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Question
Chapter 13, Problem 13.4P
1.
To determine
Compute Ratios for the given companies using the given financial statements.
2.
To determine
Identify the company that is more efficient at collecting its accounts receivables and turning over its inventory.
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Financial data for Joel de Paris, Inc., for last year follow:
Joel de Paris, Inc.Balance Sheet
BeginningBalance
EndingBalance
Assets
Cash
$
126,000
$
137,000
Accounts receivable
333,000
476,000
Inventory
574,000
488,000
Plant and equipment, net
817,000
789,000
Investment in Buisson, S.A.
403,000
430,000
Land (undeveloped)
249,000
255,000
Total assets
$
2,502,000
$
2,575,000
Liabilities and Stockholders' Equity
Accounts payable
$
378,000
$
333,000
Long-term debt
972,000
972,000
Stockholders' equity
1,152,000
1,270,000
Total liabilities and stockholders' equity
$
2,502,000
$
2,575,000
Joel de Paris, Inc.Income Statement
Sales
$
4,862,000
Operating expenses
4,035,460
Net operating income
826,540
Interest and taxes:
Interest expense
$
123,000
Tax expense
204,000
327,000
Net income…
Financial data for Joel de Paris, Inc., for last year follow:
Joel de Paris, Inc.Balance Sheet
BeginningBalance
EndingBalance
Assets
Cash
$
133,000
$
128,000
Accounts receivable
337,000
485,000
Inventory
578,000
488,000
Plant and equipment, net
872,000
859,000
Investment in Buisson, S.A.
408,000
435,000
Land (undeveloped)
251,000
249,000
Total assets
$
2,579,000
$
2,644,000
Liabilities and Stockholders' Equity
Accounts payable
$
376,000
$
337,000
Long-term debt
958,000
958,000
Stockholders' equity
1,245,000
1,349,000
Total liabilities and stockholders' equity
$
2,579,000
$
2,644,000
Joel de Paris, Inc.Income Statement
Sales
$
5,044,000
Operating expenses
4,438,720
Net operating income
605,280
Interest and taxes:
Interest expense
$
128,000
Tax expense
208,000
336,000
Net income…
Allied Construction and Axis Construction reported the following information in their annual financial statements ($ in millions):
Allied Construction
2021
2020
Sales
$
50,000
$
45,000
Net income
3,900
4,000
Total assets
26,000
24,000
Axis Construction
2021
2020
Sales
$
87,000
$
72,000
Net income
3,400
4,100
Total assets
53,000
64,000
Required:
1. Calculate Allied Construction's return on assets, profit margin, and asset turnover ratio for 2021. (Do not round your intermediate calculations. Round your answers to 2 decimal places.)
1-return on assets: _____%
2- profit margin: ________%
3-asset turnover: _____times
2. Calculate Axis Construction's return on assets, profit margin, and asset turnover ratio for 2021. (Do not round your intermediate calculations. Round your answers to 2 decimal places.)
1-return on assets: _____%
2- profit margin: ________%
3-asset turnover: _____times
3-a. Which company…
Chapter 13 Solutions
Financial Accounting
Ch. 13 - Who are the primary users of financial statements?Ch. 13 - When considering an investment in stock, investors...Ch. 13 - How does product differentiation differ from cost...Ch. 13 - What are the two general methods for making...Ch. 13 - What are component percentages? Why are they...Ch. 13 - What is ratio analysis? Why is it useful?Ch. 13 - What do profitability ratios focus on? What is an...Ch. 13 - What do turnover ratios focus on? What is an...Ch. 13 - What do liquidity ratios focus on? What is an...Ch. 13 - What do solvency ratios focus on? What is an...
Ch. 13 - What do market ratios focus on? What is an example...Ch. 13 - Prob. 12QCh. 13 - Explain why rapid growth in total sales might not...Ch. 13 - A company has total assets of 500,000 and...Ch. 13 - Prob. 2MCQCh. 13 - Prob. 3MCQCh. 13 - Prob. 4MCQCh. 13 - Prob. 5MCQCh. 13 - Prob. 6MCQCh. 13 - Prob. 7MCQCh. 13 - Prob. 8MCQCh. 13 - Prob. 9MCQCh. 13 - Prob. 10MCQCh. 13 - Prob. 13.1MECh. 13 - Prob. 13.2MECh. 13 - Prob. 13.3MECh. 13 - Computing the Financial Leverage Percentage...Ch. 13 - Analyzing the Inventory Turnover Ratio A...Ch. 13 - Prob. 13.6MECh. 13 - Prob. 13.7MECh. 13 - Prob. 13.8MECh. 13 - Prob. 13.9MECh. 13 - Prob. 13.10MECh. 13 - Using Financial Information to Identify Companies...Ch. 13 - Prob. 13.2ECh. 13 - Prob. 13.3ECh. 13 - Prob. 13.4ECh. 13 - Prob. 13.5ECh. 13 - Prob. 13.6ECh. 13 - Prob. 13.7ECh. 13 - Prob. 13.8ECh. 13 - Prob. 13.9ECh. 13 - Prob. 13.10ECh. 13 - Inferring Financial Information from Ratios E13-11...Ch. 13 - Prob. 13.12ECh. 13 - Prob. 13.13ECh. 13 - Prob. 13.1PCh. 13 - Prob. 13.2PCh. 13 - Prob. 13.3PCh. 13 - Prob. 13.4PCh. 13 - Prob. 13.5PCh. 13 - Computing Comparative Financial Statements and...Ch. 13 - Analyzing Financial Statements Using Ratios Use...Ch. 13 - Prob. 13.8PCh. 13 - Prob. 13.9PCh. 13 - Prob. 13.1APCh. 13 - Prob. 13.2APCh. 13 - Calculating Profitability, Turnover, Liquidity,...Ch. 13 - Prob. 13.4APCh. 13 - Prob. 13.5APCh. 13 - Prob. 13.6APCh. 13 - Prob. 13.1CPCh. 13 - Prob. 13.2CPCh. 13 - Comparing Companies within an Industry Refer to...Ch. 13 - Prob. 13.4CPCh. 13 - Inferring Information from the DuPont Model Ratios...Ch. 13 - Prob. 13.6CP
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- Financial data for Joel de Paris, Inc., for last year follow: Joel de Paris, Inc.Balance Sheet BeginningBalance EndingBalance Assets Cash $ 140,000 $ 120,000 Accounts receivable 450,000 530,000 Inventory 320,000 380,000 Plant and equipment, net 680,000 620,000 Investment in Buisson, S.A. 250,000 280,000 Land (undeveloped) 180,000 170,000 Total assets $ 2,020,000 $ 2,100,000 Liabilities and Stockholders' Equity Accounts payable $ 360,000 $ 310,000 Long-term debt 1,500,000 1,500,000 Stockholders' equity 160,000 290,000 Total liabilities and stockholders' equity $ 2,020,000 $ 2,100,000 Joel de Paris, Inc.Income Statement Sales $ 4,050,000 Operating expenses 3,645,000 Net operating income 405,000 Interest and taxes: Interest expense $ 150,000 Tax expense 110,000 260,000 Net income…arrow_forwardFinancial data for Joel de Paris, Inc., for last year follow: Joel de Paris, Inc.Balance Sheet BeginningBalance EndingBalance Assets Cash $ 140,000 $ 120,000 Accounts receivable 450,000 530,000 Inventory 320,000 380,000 Plant and equipment, net 680,000 620,000 Investment in Buisson, S.A. 250,000 280,000 Land (undeveloped) 180,000 170,000 Total assets $ 2,020,000 $ 2,100,000 Liabilities and Stockholders' Equity Accounts payable $ 360,000 $ 310,000 Long-term debt 1,500,000 1,500,000 Stockholders' equity 160,000 290,000 Total liabilities and stockholders' equity $ 2,020,000 $ 2,100,000 Joel de Paris, Inc.Income Statement Sales $ 4,050,000 Operating expenses 3,645,000 Net operating income 405,000 Interest and taxes: Interest expense $ 150,000 Tax expense 110,000 260,000 Net income…arrow_forwardThe income statement comparison for Rush Delivery Company shows the income statement for the current and prior year. A. Determine the operating income (loss) (dollars) for each year. B. Determine the operating income (percentage) for each year. C. The company made a strategic decision to invest in additional assets in the current year. These amounts are provided. Using the total assets amounts as the investment base, calculate the ROI. Was the decision to invest additional assets in the company successful? Explain. D. Assuming an 8% cost of capital, calculate the RI for each year. Explain how this compares to your findings in part C.arrow_forward
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