1.
Concept Introduction:
Financial analysis: It is an interpretation of financial statements using various financial tools for decision-making. External users use it to ascertain the overall health of the organization in terms of profitability, liquidity,
The return on total assets for the current year.
2.
Concept Introduction:
Financial analysis: It is an interpretation of financial statements using various financial tools for decision-making. External users use it to ascertain the overall health of the organization in terms of profitability, liquidity, efficiency, and marketability.
The profit margin and total asset turnover for current year.
3.
Concept Introduction:
Financial analysis: It is an interpretation of financial statements using various financial tools for decision-making. External users use it to ascertain the overall health of the organization in terms of profitability, liquidity, efficiency, and marketability.
The company that is more efficient in using assets in the current year.
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FUND ACCOUNTING PRINCIPLES CONNECT
- Asset Efficiency Ratios Selected financial statement numbers for Rutherford Company follow. Required: 1. Using this information, calculate Rutherfords receivable turnover ratio (rounded to two decimal places.) 2. Using this information, calculate Rutherfords asset turnover ratio (rounded to two decimal places) and also convert the ratio into days (rounded to the nearest whole day).arrow_forwardIdentify which of the following six metrics a through f best completes questions 1 through 3 below. a. Days’ sales uncollected d. Return on total assets b. Accounts receivable turnover e. Total asset turnover c. Working capital f. Profit margin 1. Which two ratios are key components in measuring a company’s operating efficiency? Which ratio summarizes these two components? 2. What measure reflects the difference between current assets and current liabilities? 3. Which two short-term liquidity ratios measure how frequently a company collects its accounts?arrow_forwardProblem 1: Viance Queen Company Required: Compute for the company’s profitability and operating efficiency ratios for 2019 Compute for the financial health ratios of the company for 2019 B.Operating Efficiency Days in Inventory AR Turnover Days in ARarrow_forward
- 1. Compute for the company's profitability and operating efficiency's ratios for 2019 B.Operating Efficiency a. Asset Turnover b. Fixed Asset Turnover c. Inventory Turnover d. Days in Inventory e. AR Turnover f. Days in ARarrow_forwardEdison Company reported the following for the current year: $ 84,000 59,000 21,080 63,000 77,080 Net sales Cost of goods sold Net income Beginning balance of total assets Ending balance of total assets Compute (a) profit margin and (b) return on total assets. Complete this question by entering your answers in the tabs below. Profit Margin Ratio Compute the return on total assets. Return On Total Assets Numerator: 7 7 7 Return On Total Assets Denominator: = Return On Total Assets Return on total assets II =arrow_forwardReturn on total assets; a company reports the following income statement and balance sheet information for the current year: net income $178,320 interest expense $31,470 average total assets $3,330,000. A. Determine the return of total assets. B. Determine the company's price- earnings ratio.arrow_forward
- Mastery Problem: Financial Statement Analysis Liquidity and Solvency Measures Your friend, another accountant, has bet you that with your knowledge of accounting and just the computations for common analytical measures, you can figure out many aspects of a company's financial statements. You take the bet! Match each computation to one of the liquidity and solvency measures in the table. (Hint: Begin by looking for simple computations and identifying the amounts in those computations. Look for other measures that use those amounts.) Liquidity and Solvency Measures Computations Working capital $3,095,000 –- $860,000 - v Current ratio $3,095,000 ÷ $860,000 - Quick ratio $1,866,000 + $860,000 V Accounts receivable turnover $8,260,000 + [($714,000 + $740,000) ÷ 2]° Number of days' sales in receivables [(S714,000 + $740,000) ÷ 21 ÷ ($8,260,000 ÷ 365) ▪ Inventory turnover $4,100,000 ÷ [($1,072,000 + $1,100,000) ÷ 21 - Number of days' sales in inventory [($1,072,000 + $1,100,000) ÷ 21 ÷…arrow_forwardQuestion 2Alex is currently considering to invest his money in one of the companies between Company A and Company B. The summarized final accounts of the companies for their last completed financial year are as follows: a. Calculate the following ratios for Company A and Company B. State clearly the formulae used for each ratio: i. Gross Profit Marginii. Net Profit Marginiii. Inventory Turnover Period (days)iv. Receivables Collection Period (days)arrow_forwardYour friend, another accountant, has bet you that with your knowledge of accounting and just the computations for common analytical measures, you can figure out many aspects of a company's financial statements. You take the bet! Match each computation to one of the liquidity and solvency measures in the table. (Hint: Begin by looking for simple computations and identifying the amounts in those computations. Look for other measures that use those amounts.) Liquidity and Solvency Measures Computations Working capital $3,095,000 - $900,000 Current ratio $3,095,000 ÷ $900,000 Quick ratio $1,866,000 ÷ $900,000 Accounts receivable turnover $8,250,000 ÷ [($714,000 + $740,000) ÷ 2] Number of days' sales in receivables [($714,000 + $740,000) ÷ 2]÷ ($8,250,000 ÷ 365) Inventory turnover $4,100,000 ÷ [($1,072,000 + $1,100,000) ÷ 2] Number of days' sales in inventory [($1,072,000 + $1,100,000) ÷ 2] ÷ ($4,100,000 ÷ 365) Ratio of fixed assets to long-term liabilities $2,690,000 + $1,690,000 Ratio of…arrow_forward
- Saved Help Edison Co. reported the following for the current year: Net sales Cost of goods sold Net income Beginning balance of total assets Ending balance of total assets $80,000 $56,000 $16,000 $60,000 $68,000 Compute (a) profit margin and (b) return on total assets. Complete this question by entering your answers in the tabs below. Profit Margin Ratio Return On Total Assets Compute the return on total assets. Return On Total Assets Choose Denominator: Choose Numerator: Return On Total Assets Return on total assets < Profit Margin Ratio Relue O Te Asesie < Prev 7 of 7 Next ere to search a 米 *5 # & * 4 8. W E R Y S G J K LL %24arrow_forwardReturn on assets The financial statements of The Hershey Company (HSY) are shown in Exhibits 6 through 9. Based upon these statements, answer the following questions. 1. What are Hershey's sales (in millions)? 2. What is Hershey's cost of sales (in millions)? 3. What is Hershey's net income (in millions)? 4. What is Hershey's percent of the cost of the sales to sales? Round to one decimal place. 5. The percent that a company adds to its cost of sales to determine the selling price is called a markup. What is Hershey's markup percent? Round to one decimal place. 6. What is the percentage of net income to sales for Hershey? Round to one decimal place. 7. Hershey had total assets of $5,554 (millions) at the beginning of the year. Compute the return on assets for Hershey for the year shown in Exhibits 6–9. Round to one decimal place.arrow_forwardThe following are financial data taken from the annual report of Foundotos Company: Year 2 $134,448 51,981 37,154 57,504 Net sales Gross property, plant and equipment Accumulated depreciation Intangible assets (net) A. Calculate the following ratios for Year 1 and Year 2: 1. Fixed asset turnover 2. Accumulated depreciation divided-by-gross fixed assets B. What do the trends in these ratios reveal about Foundotos? Year 1 $130,060 47,744 34,180 36,276arrow_forward
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