Chapter 2, Problem 2.4AP

Quiz 2: Solvency Debt-to-equity ratio Times interest earned ratio Debt service coverage ratio Cash flow from operations to capital expenditures ratio Profitability Return on assets ratio Return on sales ratio Asset turnover ratio Return on common stockholders equity ratio Leverage Earnings per share (EPS) Price/earnings (P/E) ratio Dividend payout ratio Dividend yield ratio A measure of a companys success in earning a return for the common stockholders. The relationship between a companys performance according to the income statement and its performance in the stock market. The ability of a company to remain in business over the long term. A variation of the profit margin ratio; measures earnings before payments to creditors. A companys bottom line stated on a per-share basis. The percentage of earnings paid out as dividends. The ratio of total liabilities to total stockholders equity. A measure of the ability of a company to finance long-term asset acquisitions with cash from operations. A measure of a companys success in earning a return for all providers of capital. The relationship between net sales and average total assets. The relationship between dividends and the market price of a companys stock. The use of borrowed funds and amounts contributed by preferred stockholders to earn an overall return higher than the cost of these funds. An income statement measure of the ability of a company to meet its interest payments. A statement of cash flows measure of the ability of a company to meet its interest and principal payments. How well management is using company resources to earn a return on the funds invested by various groups.

Lowes Companies Inc., a major competitor of The Home Depot in the home improvement business, operates over 1,700 stores. Lowes recently reported the following balance sheet data (in millions): a. Determine the total stockholders equity at the end of Years 2 and 1. b. Determine the ratio of liabilities to stockholders equity for Year 2 and Year 1. Round to two decimal places. c. What conclusions regarding the risk to the creditors can you draw from (b)? d. Using the balance sheet data for The Home Depot in Exercise 1-26, how does the ratio of liabilities to stockholders equity of Lowes compare to that of The Home Depot?

The financial condition of two companies is expressed in the following accounting equation:    Assets = Liabilities + Common Stock + Retained Earnings Allen $ 12,000 = $ 8,760 + $ 2,760 + $ 480 White $ 18,150 = $ 4,200 + $ 9,750 + $ 4,200 Requireda. Based on this information alone, can White pay a $4,600 dividend?b-1. Reconstruct the accounting equation for each company using percentages instead of dollar values.b-2. Which company is more financially stable?

Here are comparative financial statement data for Oriole Company and Pharoah Company, two competitors. All data are as of December 31, 2022, and December 31, 2021. Compute the 2022 return assets and the return on common stockholders' equity for both companies.

You 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…

You 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…

Calculate the financial indicators of the firms J&J for the year 2018 and fill in the spaces marked in the table. Company Name:   Year 2018 Chemicals and Allied Products Industry Ratios  ………….. Solvency or Debt Ratios Merck J&J 2018 Debt ratio   ….   …. 0.47 Debt-to-equity ratio   ….   …. 0.38 Interest coverage ratio   ….   …. -9.43 Liquidity Ratios       Current ratio   ….   …. 3.47 Quick ratio   ….   …. 2.12 Cash ratio   ….   …. 2.24 Profitability Ratios       Profit margin   ….   …. -93.4% ROE (Return on equity), after tax   ….   …. -248.5 ROA (Return on assets)   ….   …. -146.5 Gross margin   ….   …. 55.3% Operating margin (Return on sales)   ….   …. -42.9% Activity or Efficiency Ratios       Asset turnover   ….   …. 1.08 Receivables turnover (days)   ….   …. 16 Inventory turnover (days)…

The comparative balance sheets for 2024 and 2023 and the statement of income for 2024 are given below for Dux Company. Additional information from Dux's accounting records is provided also. DUX COMPANY Comparative Balance Sheets December 31, 2024 and 2023 ($ in thousands)   2024 2023 Assets     Cash $ 121 $ 40 Accounts receivable 43 71 Less: Allowance for uncollectible accounts (5) (4) Dividends receivable 4 3 Inventory 100 95 Long-term investment 54 50 Land 95 85 Buildings and equipment 162 200 Less: Accumulated depreciation (38) (80)   $ 536 $ 460 Liabilities     Accounts payable $ 46 $ 82 Salaries payable 6 9 Interest payable 7 2 Income tax payable 5 6 Notes payable 10 0 Bonds payable 80 50 Less: Discount on bonds (5) (6) Shareholders' Equity     Common stock 210 200 Paid-in capital—excess of par 24 20 Retained earnings 163 97 Less: Treasury stock (10) 0   $ 536 $ 460 DUX COMPANY Income Statement For the Year…

The financial condition of two companies is expressed in the following accounting equation:    Assets = Liabilities + Common Stock + Retained Earnings Allen $ 12,000 = $ 8,760 + $ 2,760 + $ 480 White $ 18,150 = $ 4,200 + $ 9,750 + $ 4,200 Requiredc. Assume Allen incurs a $6,100 operating loss. The remaining assets are sold for the value shown on the books, and the cash proceeds are distributed to the creditors and investors. How much money will be paid to creditors and how much will be paid to investors?d. Assume White incurs a $6,100 operating loss. The remaining assets are sold for the value shown on the books, and the cash proceeds are distributed to the creditors and investors. How much money will be paid to creditors and how much will be paid to investors?