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Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281

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BuyFindarrow_forward

Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281
Textbook Problem
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Use the following information for P4—17 and P4—18:

The Hershey Company is one of the world’s leading producers of chocolates, candies, and confections. It sells chocolates and candies, mints and gums, baking ingredients, toppings, and beverages. Hershey’s consolidated balance sheets for 20X2 and 20X3 follow.

Chapter 4, Problem 18P, Use the following information for P417 and P418: The Hershey Company is one of the worlds leading , example  1

Ratios Analysis: Hershey Refer to the information for Hershey On the preceding page. Additional information for 20X3 is as follows (amounts in millions):

Chapter 4, Problem 18P, Use the following information for P417 and P418: The Hershey Company is one of the worlds leading , example  2

Required:

Next Level Compute the following ratios for 20X3. Provide a brief description of what each ratio reveals about Hershey.

  1. 1. return on common equity
  2. 2. debt-to-assets
  3. 3. debt-to-equity
  4. 4. current
  5. 5. quick (Hershey uses cash and equivalents, short terms securities, and receivables in their quick ratio calculation.)
  6. 6. inventory turnover days
  7. 7. accounts receivable turnover days
  8. 8. accounts payable turnover days
  9. 9. operating cycle (in days)
  10. 10. total asset turnover

Requirement 1:

To determine

Determine the return on common equity ratio of Company H for 20X3.

Explanation

Determine the return on common equity ratio of Company H for 20X3:

Step 1: Calculate the average total common stockholders’ equity.

Average total commonstockholders’ equity}={[Total common stocholders' equity, ending+Total common stocholders' equity, beginning+]2}={[$1,616.1million+$1,048.4million]2}=$2,664

Requirement 2:

To determine

Determine the debt-to-assets ratio of Company H for 20X3.

Requirement 3:

To determine

Determine the debt-to-equity ratio of Company H for 20X3.

Requirement 4:

To determine

Determine the current ratio of Company H for 20X3.

Requirement 5:

To determine

Determine the quick ratio of Company H for 20X3.

Requirement 6:

To determine

Determine the inventory turnover in days of Company H for 20X3.

Requirement 7:

To determine

Determine the accounts receivable turnover in days of Company H for 20X3.

Requirement 8:

To determine

Determine the accounts payable turnover in days of Company H for 20X3.

Requirement 9:

To determine

Determine the operating cycle in days of Company H for 20X3.

Requirement 10:

To determine

Determine the total assets turnover ratio of Company H for 20X3.

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