BuyFindarrow_forward

Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094

Solutions

Chapter
Section
BuyFindarrow_forward

Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094
Textbook Problem

Financial statement analysis

The financial statements for Nike, Inc., are presented in Appendix D at the end of the text. Use the following additional information (in thousands):

Accounts receivable at May 31, 2014 $ 3,117
Inventories at May 31,2014 4,142
Total assets at May 31, 2014 18,594
Stockholders’ equity at May 31,2014 12,000

Instructions

1. Determine the following measures for the fiscal years ended May 31, 2016, and May 31, 2015 Round ratios and percentages to one decimal place.

  1. a. Working capital
  2. b. Current ratio
  3. c. Quick ratio
  4. d. Accounts receivable turnover
  5. e. Number of days’ sales in receivables
  6. f. Inventory turnover
  7. g. Number of days’ sales in inventory
  8. h. Ratio of liabilities to stockholders’ equity
  9. i. Asset turnover
  10. j. Return on total assets.
  11. k. Return on common stockholders’ equity
  12. l. Price-earnings ratio, assuming that the market price was $54.90 per share on May 29, 2016, and $52.81 per share on May 30, 2015
  13. m. Percentage relationship of net income to sales

2. What conclusions can be drawn from these analyses?

To determine

Financial Ratios: Financial ratios are the metrics used to evaluate the liquidity, capabilities, profitability, and overall performance of a company.

Given info: Financial Statements of N, Incorporation.

1.

To determine: The following ratios for three years:

  1. (a) Working capital
  2. (b) Current ratio
  3. (c) Quick ratio
  4. (d) Accounts receivable turnover ratio
  5. (e) Number of days’ sales in receivables
  6. (f) Inventory turnover ratio
  7. (g)  Number of days’ sales in inventory
  8. (h) Ratio of liabilities to stockholders’ equity
  9. (i) Asset turnover ratio
  10. (j) Return on total assets
  11. (k) Return on common stockholders’ equity
  12. (l) Price-earnings ratio
  13. (m) Percentage relationship of net income  to sales 
Explanation

Working capital is determined as the difference between current assets and current liabilities.

Formula:

2.

To determine

To draw: Conclusion about the analysis made

Still sussing out bartleby?

Check out a sample textbook solution.

See a sample solution

The Solution to Your Study Problems

Bartleby provides explanations to thousands of textbook problems written by our experts, many with advanced degrees!

Get Started

Additional Business Solutions

Find more solutions based on key concepts

Show solutions add

What is the purpose of accounting?

College Accounting, Chapters 1-27

MIRR Project X costs 1,000, and its cash flows arc the same in Years 1 through 10. Its IRR is 12%, and its WACC...

Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)

What is driver analysis? What role does it play in process value analysis?

Cornerstones of Cost Management (Cornerstones Series)