Financial Accounting
5th Edition
ISBN: 9781618531650
Author: Thomas Dyckman
Publisher: Cambridge Business Publishers
expand_more
expand_more
format_list_bulleted
Videos
Question
Chapter 2, Problem 54P
a.
To determine
Compute the total amount of assets invested in (1) ANF and (2) JWN. Compute the total expenses in dollars and as a percentage of sales for both companies.
b.
To determine
Compute the return on equity for ANF and JWN.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
FINANCIAL RATIOS
Required:
a. Compute for the company's profitability and operating efficiency ratios in 2014.
b. Compute for the financial health ratios of the company in 2014 and 2013.
Very Berry Company
Very Berry Company
Statement of Comprehensive Income
Statement of financial Position
For the year ended December 31
For the year ended December 31
2014
2013
400,000
5,600,000
2014
2013
Cash
180,000
Short-term Investments
1,800,000
Sales
10,040,000
8,760,000
Accounts Receivable
1,480,000
1,060,000
Cost of Goods Sold
5,680,000
5,860,000
Inventory
1,380,000
1,640,000
4,360,000
1,160,000
Gross Profit
2,800,000
8,860,000
10,860,000
Other Current Assets
4,680,000
Operating Expenses
Operating Income
Interest Expense
1,680,000
Total Current Assets
5,040,000
1,20,000
28,000
3,200,000
Equipment
6,800,000
5,200,000
100,000
Total Assets
17,660,000
10,240,000
3,100,000
Accounts Payable
Notes Payable - long term
Owner, Capital
Total Liabilities and Capital
2,620,000
2,120,000
Net Income
1,192,000…
For fiscal year 2018, Walmart Inc. (WMT) had total revenues of $500.34 billion, net income of $9.86 billion, total
assets of $204.52 billion, and total shareholders' equity of $77.87 billion.
a. Calculate Walmart's ROE directly, and using the DuPont Identity.
b. Comparing with the data for Costco, use the DuPont Identity to understand the difference between the
two firms' ROES.
Data table
For fiscal year 2018, Costco Wholesale Corporation (COST) had a net profit margin of 2.08%, asset
turnover of 3.55, and a book equity multiplier of 3.37. Costco's ROE (DuPont) is 24.88%.
1. Data for Abakada Trading Company are given below:
2014
2015
Revenue
1,939,500
1,674,675
Cost of Goods Sold
900,000
843,975
Gross Profit
1,039,500
830,700
Selling and General Expenses
445,500
409,725
Other Expenses
37,575
30,825
Net Income
556,425
390,150
Requirements:
a. Prepare a Vertical Analysis Statement A of Comprehensive Income for 2014 and 2015
for Abakada Trading Company.
b. Prepare a horizontal analysis for Abakada Trading Company.
Chapter 2 Solutions
Financial Accounting
Ch. 2 - Prob. 1MCCh. 2 - Prob. 2MCCh. 2 - Prob. 3MCCh. 2 - Prob. 4MCCh. 2 - Prob. 5MCCh. 2 - Prob. 1QCh. 2 - Prob. 2QCh. 2 - Prob. 3QCh. 2 - Prob. 4QCh. 2 - Prob. 5Q
Ch. 2 - Prob. 6QCh. 2 - Prob. 7QCh. 2 - Prob. 8QCh. 2 - Prob. 9QCh. 2 - Prob. 10QCh. 2 - Prob. 11QCh. 2 - Prob. 12QCh. 2 - Prob. 13QCh. 2 - Prob. 14MECh. 2 - Prob. 15MECh. 2 - Prob. 16MECh. 2 - Prob. 17MECh. 2 - Prob. 18MECh. 2 - Prob. 19MECh. 2 - Prob. 20MECh. 2 - Prob. 21MECh. 2 - Prob. 22MECh. 2 - Prob. 23MECh. 2 - Prob. 24MECh. 2 - Prob. 25MECh. 2 - Prob. 26MECh. 2 - Prob. 27MECh. 2 - Prob. 28MECh. 2 - Prob. 29MECh. 2 - Prob. 30MECh. 2 - Prob. 31MECh. 2 - Prob. 32MECh. 2 - Prob. 33MECh. 2 - Prob. 34ECh. 2 - Prob. 35ECh. 2 - Prob. 36ECh. 2 - Prob. 37ECh. 2 - Prob. 38ECh. 2 - Prob. 39ECh. 2 - Prob. 40ECh. 2 - Prob. 41ECh. 2 - Prob. 42ECh. 2 - Prob. 43ECh. 2 - Prob. 44ECh. 2 - Prob. 45ECh. 2 - Prob. 46ECh. 2 - Prob. 47ECh. 2 - Prob. 48ECh. 2 - Prob. 49PCh. 2 - Prob. 50PCh. 2 - Prob. 51PCh. 2 - Prob. 52PCh. 2 - Prob. 53PCh. 2 - Prob. 54PCh. 2 - Prob. 55PCh. 2 - Prob. 56PCh. 2 - Prob. 57PCh. 2 - Prob. 58PCh. 2 - Prob. 59PCh. 2 - Prob. 60PCh. 2 - Prob. 61PCh. 2 - Prob. 62PCh. 2 - Prob. 63PCh. 2 - Prob. 64PCh. 2 - Prob. 65PCh. 2 - Prob. 66PCh. 2 - Prob. 67PCh. 2 - Prob. 68PCh. 2 - Prob. 69PCh. 2 - Prob. 70PCh. 2 - Prob. 71CPCh. 2 - Prob. 72CP
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Use the following tables to answer the question: LOGIC COMPANY Income Statement For years ended December 31, 2016 and 2017 (values in $) 2016 2017 Gross sales 19,800 15,600 Sales returns and allowances 900 100 Net sales 18,900 15,500 COGS 11,800 8,800 Gross profit 7,100 6,700 Depreciation 780 640 Selling and administrative expenses 2,800 2,400 Research 630 540 Miscellaneous 440 340 Total operating expenses 4,650 3,920 Income before interest and taxes 2,450 2,780 Interest expense 640 540 Income before taxes 1,810 2,240 Provision for taxes 724 896 LOGIC COMPANY Balance Sheet For years ended December 31, 2016 and 2017 (values in $) 2016 2017 Current assets 12,300 9,400 Accounts receivable 16,900 12,900 Merchandise inventory 8,900 14,400 Prepaid expenses 24,400 10,400 Total current assets 62,500 47,100 Building (net) 14,900 11,400 Land 13,900 9,400 Total plant and equipment 28,800 20,800 Total assets 91,300 67,900 Accounts payable 13,400 7,400 Salaries payable 7,500 5,400 Total current…arrow_forwardPresented below are the 2016 income statement and comparative balance sheets for Santana Industries. SANTANA INDUSTRIESIncome StatementFor the Year Ended December 31, 2016($ in thousands) Sales revenue $ 17,250 Service revenue 6,400 Total revenue $ 23,650 Operating expenses: Cost of goods sold 8,700 Selling 3,900 General and administrative 3,000 Total operating expenses 15,600 Operating income 8,050 Interest expense 350 Income before income taxes 7,700 Income tax expense 4,000 Net income $ 3,700 Balance Sheet Information ($ in thousands) Dec. 31,2016 Dec. 31,2015 Assets: Cash $ 8,850 $ 3,550 Accounts receivable 5,500 3,700 Inventory 7,000 4,500 Prepaid rent 300 600 Plant and equipment…arrow_forwardRequired: Use an Excel file to answer the following questions. Compute the following ratios for the companies’ 2014 fiscal years. (Use formulas): Current ratio Average days to sell inventory. (Use average inventory.) Debt to assets ratio. Return on investment. (Use average assets and use “earnings from continuing operations” rather than “net earnings.”) Gross margin percentage. Asset turnover. (Use average assets.) Net margin. (Use “earnings from continuing operations” rather than “net earnings.”) Plant assets to long-term debt ratio. Which company appears to be more profitable? Explain your answer and identify which ratio(s) from Requirement a you used to reach your conclusion. Which company appears to have the higher level of financial risk? Explain your answer and identify which ratio(s) from Requirement a you used to reach your conclusion. Which company appears to be charging higher prices for its goods? Explain your answer and identify which ratio(s) from Requirement a you…arrow_forward
- Analyze the financials for Wal-Mart and its competitor(s) in the online market in 2012 and 2016. What do you conclude from analyzing financial ratios about the companies strategies and Walmart's competitive advantage? Revenue Cost of goods sold Gross profit SG&A and other expenses Operating income Net income Total assets Total liabilities Total equity Total assets end Total assets beginning Total liabilities end Total liabilities beginning Total equity end Total equity beginning Cost of goods sold as % of sales Gross margin SG&A as % of sales Operating income margin Net profit margin Asset turnover ROA ROE Walmart 2012 in $ millions 443,854 335,127 108,727 85,265 23,462 15,699 186,931 113,021 73,910 193,406 180,455 117,241 108,800 76,165 71,655 75.5% 24.5% 19.2% 5.3% 3.5% 2.4 8.4% 21.2% Walmart 2016 in $ millions 478,614 360,984 117,630 97,041 20,589 14,694 201,536 116,762 84,774 199,581 203,490 115,970 117,553 83,611 85,937 75.4% 24.6% 20.3% 4.3% 3.1% 2.4 7.3% 17.3% Amazon 2012 in $…arrow_forwardComputing and Interpreting Financial Statement Ratios Following are selected ratios of Norfolk Southern for 2018 and 2017. Return on Assets (ROA) Component 2018 2017 Profitability (Net income/Sales) 25.3% 53.2% Productivity (Sales/Average assets) 0.338 0.319 a. Was the company profitable in 2018?Answer b. Was the company more profitable in 2018 or 2017?Answer c. Is the change in productivity a positive or negative development?Answer d. Compute the company’s ROA for 2018 and for 2017. Note: Round answers to one decimal places (example: 10.4%). ROA 2018 Answer 2017 Answer e. From the information provided, which of the following best explains the change in ROA during 2018? Answerarrow_forwardThe following information is from the 2014 annual report of Weber Corporation, a company that supplies manufactured parts to the household appliance industry. Average Total Assets Average Interest - Bearing Debt Average Other Liabilities Average Shareholder's Equity Sales Interest Expense Net Income 24,500,000 10,000,000 2,250,000 12,250,000 49,000,000 800,000 2,450,000 Required: 1. Compute Weber Corporation's return on assets (ROA) for 2014 using a combined federal and state income tax rate of 40% where needed. 2. Compute the profit margin and asset turnover components of ROA for 2014. 3. Weber's management believes that various business initiatives will produce an asset turnover rate of 2.25 next year. If the profit margin next year is unchanged from 2014, what will be the company's ROA?arrow_forward
- The following balances were reported in the financial statements for Ruby Company. 2016 2015 Net Sales $1,650,000 $1,750,000 Net Income 170,000 205,000 Current Assets 410,000 535,000 Current Liabilities 170,000 210,000 Total Liabilities 500,000 675,000 Total Assets 1,550,000 2,450,000 Required: 1. Compute the following ratios for 2016 and 2015 for Ruby Company. a. Return on sales ratio b. Current ratio c. Debt-to-total-assets ratioarrow_forwardPrepare the common-size financial statement for the entities below and provide a reasoned explanation of the benefits relative to ratios when used to compare performance and establish trends. Income Statements for year ending 31 December 2022 Timber Co. ltd $.000 Biscuit Co. Ltd. $'000 35,119 30,990 12.693 11.088 22,426 13,158 Net revenue Cost of goods sold Gross profit Selling & administrative expenses Other operating expenses Operating income Interest income Other income (net of expenses) Profits before tax Income tax expense Profits after taxes 819 8,449 833 6,447 14,193 2.384 11,809 19,902 11,358 313 8,231 355 988 8,864 2,040 6,824arrow_forwardSummary operating data for Custom Wire & Tubing Company during the year ended April 30, 2018, are as follows: cost of goods sold, $510,700; administrative expenses, $63,600; interest expense, $38,000; rent revenue, $127,200; sales, $826,800; and selling expenses, $95,400. Prepare a single-step income statement. Custom Wire & Tubing Company Income Statement For the Year Ended April 30, 2018 Revenues: $ Total revenues $ Expenses: $ Total expenses $arrow_forward
- Below are several financial statement items for fiscal year 2013 for two grocery chains, Whole Foods Market, an upscale organic grocer, and The Kroger Co., a mainstream grocer. ($ millions) a. Calculate each company's return on assets (ROA) and return on equity (ROE). Comment on any differences you observe. b. Disaggregate the ROA for each company into profit margin (PM) and asset turnover (AT). Explain why Whole Foods has a higher ROA, is it because of PM or AT or both? Whole Foods Market The Kroger Co. $1,508 Net income $551 12,917 5,416 96,751 24,064 Sales Average assets Average stockholders' equity 3,840 4,090arrow_forwardOperating data for Flounder Corp. are presented below. 2017 2016 Sales revenue $825,400 $628,400 Cost of goods sold 527,300 412,700 Selling expenses 125,600 76,800 Administrative expenses 75,500 52,800 Income tax expense 36,700 29,200 Net income 60,300 56,900 Prepare a schedule showing a vertical analysis for 2017 and 2016. (Round percentages to 1 decimal place, e.g. 12.1%.)arrow_forwardUse the following Income Statement and Balance Sheet Information for 2018 to answer the question below. This is a Retail Company. All numbers are in Millions. Income Statement Total Sales213.8 Cost of Sales151.3 Gross Profit213.8-151.3 Selling and Administrative Expenses22.3 Research and Development 7.7 Depreciation and Amortization4.5 Other Income2.4 EBIT213.8-151.3-22.3-7.7-4.5+2.4 Interest Expense5.8 Pretax Income213.8-151.3-22.3-7.7-4.5+2.4-5.8 Taxes( 213.8-151.3-22.3-7.7-4.5+2.4-5.8 )*0.30 Net Income( 213.8-151.3-22.3-7.7-4.5+2.4-5.8 )*0.70 Balance Sheet Assets Liabilities Cash65.8Accounts Payable43.3Accounts Receivable54.4Notes Payable/Short term debt1.6Inventories4.4 Total Current Assets65.8+54.4+4.4Total Current Liabilities43.3+1.6 Net property, plant and equipment103.4Long-term debt80.0Total long-term assets103.4Total long-term debt liabilities80.0 Total Liabilities43.3+1.6+80.0 Stockholders' Equity (Total Equity)65.8+ 54.4+4.4+103.4-43.3-1.6-80.0Total…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Financial Accounting: The Impact on Decision Make...AccountingISBN:9781305654174Author:Gary A. Porter, Curtis L. NortonPublisher:Cengage Learning
Managerial AccountingAccountingISBN:9781337912020Author:Carl Warren, Ph.d. Cma William B. TaylerPublisher:South-Western College Pub
Financial Accounting: The Impact on Decision Make...
Accounting
ISBN:9781305654174
Author:Gary A. Porter, Curtis L. Norton
Publisher:Cengage Learning
Managerial Accounting
Accounting
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:South-Western College Pub
How To Analyze an Income Statement; Author: Daniel Pronk;https://www.youtube.com/watch?v=uVHGgSXtQmE;License: Standard Youtube License