Horngren's Financial & Managerial Accounting, The Financial Chapters, Student Value Edition (5th Edition)
5th Edition
ISBN: 9780133851731
Author: Tracie L. Miller-Nobles, Brenda L. Mattison, Ella Mae Matsumura
Publisher: PEARSON
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Question
Chapter 15, Problem 15.9SE
1)
To determine
Profitability ratios: In general, financial ratios are used to evaluate capabilities, profitability, and overall performance of a company. The following are the ratios that evaluate the profitability of a company:
- Profit margin ratio: Profit margin ratio is used to determine the percentage of net income that is being generated per dollar of revenue or sales.
Formula:
Rate of return on total assets: Return on assets determines the particular company’s overall earning power.
Formula:
- Asset turnover ratio: Asset turnover ratio is used to determine the asset’s efficiency towards sales.
Formula:
- Rate of return on common
stockholders’ equity : Rate of return on stockholders’ equity is used to determine the relationship between the net income and the average common equity that are invested in the company.
Formula:
To compute: Profitability ratios
Given info: Income statement and Balance sheet
2)
To determine
To Compute: the rate of return on total assets for Company S for 2016.
3)
To determine
To Compute: the asset turnover for the Company S for the year 2016.
4)
To determine
To Compute: the rate of return on common stockholders’ equity for the Company S for the year 2016.
5)
To determine
To comment: Whether the company is strong or weak.
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Students have asked these similar questions
Please 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
133,210
The condensed financial statements of John Cully Company, for the years ended June 30, 2017 and 2016, are presented below.
Compute the following ratios for 2017 and 2016.
Current ratio
Inventory turnover. (Inventory on 6/30/15 was $599.0.)
Profit margin.
Return on assets. (Assets on 6/30/15 were $3,349.9.)
Return on common stockholders’ equity. (Stockholders’ equity on 6/30/15 was $1,795.9.)
Debt to assets ratio.
Times interest earned.
Please 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 CHF 131,900 million. What reasonable conclusions an analyst might make about the companies efficiency, Companies solvency, Liquidity and Profitability?
In millions of CHF
Notes
2018
2017 *
Sales
3
91,439
89,590
Cost of goods sold
(46,070)
(45,571)
Trading operating profit
3
13,789
13,277
Operating profit
13,752
10,156
Profit before taxes, associates and joint ventures
12,991
9,460
Taxes
13
(3,439)
(2,773)
Profit for the year
10,468
7,511
Notes
2018
2017 *
Assets
Current assets
Cash and cash equivalents
12/16…
Chapter 15 Solutions
Horngren's Financial & Managerial Accounting, The Financial Chapters, Student Value Edition (5th Edition)
Ch. 15 - What part of the Libertys annual report is written...Ch. 15 - Horizontal analysis of Liberty's balance sheet for...Ch. 15 - Vertical analysis of Liberty's balance sheet for...Ch. 15 - Which statement best describes Liberty's acid-test...Ch. 15 - Liberty's inventory turnover during 2017 was...Ch. 15 - Prob. 6QCCh. 15 - Prob. 7QCCh. 15 - Liberty's rate of return on common stockholders'...Ch. 15 - The company has 2,500 shares of common stock...Ch. 15 - Prob. 10AQC
Ch. 15 - What ate the three main ways to analyze financial...Ch. 15 - What is an annual report? Briefly describe the key...Ch. 15 - Prob. 3RQCh. 15 - What is trend analysis, and how does it differ...Ch. 15 - Prob. 5RQCh. 15 - Prob. 6RQCh. 15 - Prob. 7RQCh. 15 - Briefly describe the ratios that can be used to...Ch. 15 - Prob. 9RQCh. 15 - Briefly describe the ratios that can be used to...Ch. 15 - Briefly describe the ratios that can be used to...Ch. 15 - Prob. 12RQCh. 15 - Prob. 13RQCh. 15 - Prob. 14RQCh. 15 - Prob. 15RQCh. 15 - Prob. 15.1SECh. 15 - Performing horizontal analysis McDonald Corp....Ch. 15 - Calculating trend analysis Variline Corp. reported...Ch. 15 - Performing vertical analysis Hoosier Optical...Ch. 15 - Preparing common-size income statement Data for...Ch. 15 - Shine's Companies, a home improvement store chain,...Ch. 15 - Shine's Companies, a home improvement store chain,...Ch. 15 - Shine's Companies, a home improvement store chain,...Ch. 15 - Prob. 15.9SECh. 15 - Prob. 15.10SECh. 15 - Prob. 15.11SECh. 15 - Using ratios to reconstruct a balance sheet...Ch. 15 - Prob. 15.13SECh. 15 - Prob. 15.14SECh. 15 - Prob. 15.15ECh. 15 - Computing trend analysis Grand Oaks Realty's net...Ch. 15 - Prob. 15.17ECh. 15 - Prob. 15.18ECh. 15 - Prob. 15.19ECh. 15 - Prob. 15.20ECh. 15 - Analyzing the ability to pay liabilities Big Bend...Ch. 15 - Analyzing profitability Varsity, Inc.s comparative...Ch. 15 - Prob. 15.23ECh. 15 - Using ratios to reconstruct a balance sheet The...Ch. 15 - Prob. 15.25ECh. 15 - Computing earnings per share Falconi Academy...Ch. 15 - Prob. 15.27APCh. 15 - Prob. 15.28APCh. 15 - Prob. 15.29APCh. 15 - Prob. 15.30APCh. 15 - Using ratios to evaluate a stock investment...Ch. 15 - Prob. 15.32APCh. 15 - Preparing an income statement The following...Ch. 15 - Computing trend analysis and return on common...Ch. 15 - Prob. 15.35BPCh. 15 - Prob. 15.36BPCh. 15 - Determining the effects of business transactions...Ch. 15 - Prob. 15.38BPCh. 15 - Prob. 15.39BPCh. 15 - Prob. 15.40BPCh. 15 - Prob. 15.41CPCh. 15 - Lance Berkman is the controller of Saturn, a dance...Ch. 15 - Prob. 15.1CTEI
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