INTER. ACCTNG. (LOOSE) W/ALEK+CONNECT
9th Edition
ISBN: 9781307040166
Author: SPICELAND
Publisher: MCG/CREATE
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Textbook Question
Chapter 4, Problem 4.16BE
Profitability ratios
• LO4–10
The 2018 income statement for Anderson TV and Appliance reported sales revenue of $420,000 and net income of $65,000. Average total assets for 2018 was $800,000. Shareholders’ equity at the beginning of the year was $500,000 and $20,000 was paid to shareholders as dividends. There were no other shareholders’ equity transactions that occurred during the year. Calculate the profit margin on sales, return on assets, and return on shareholders’ equity for 2018.
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Financial Accounting
CMulford: Financial Statement Analysis: 13
Using Return on Assets and Return on Equity
to Compare Performance Across Companies
Thiokol Corp. and Wyman-Gordon, Inc.
In a recent fiscal year, Thiokol Corp. reported sales of $889.5
million and net income of $51.4 million. For the same year,
Wyman-Gordon, reported sales of $499.6 million and net
income of $25.2 million, about half the income of Thiokol.
Both companies are in the same industry, aerospace and
defense.
Use the data provided below to compare financial performance
for the two companies (amounts in millions).
Thiokol
$ 889.5
$ 51.4
$ 818.3
$ 447.9
Wyman-Gordon
$ 499.6
$ 25.2
$ 375.9
$ 109.9
Sales
Net income
Total assets
Shareholders' equity
Calculate:
Return on assets
Return on equity
Why is Return on equity so different for the two companies?
2017
Net profit margin
Gross profit margin
Current ratio
Quick ratio
Debt ratio
Interest coverage ratio
Dividend yield
Earnings per share
profit 207.7 million
revenue- 5.63 billion
gross profit- 1.230.5 million
current asset- 1.170.7 million
current liabilities- 885.8 million
operating profit- 1.205.5 million
interest expense- 10.7 thousand
Profitability Ratios
Financial
Ratios
Return on
Equity
Return on
Assets
Gross Profit
Margin
Operating
Profit Margin
Net Profit
Margin
2017
9.3%
ww
57.21%
38.35%
2018
9.8%
5.0%
56.15%
36.77%
|
2019
10.3%
5.2%
55.66%
34.89%
359.82% 359.90% 356.70%
2020
5.3%
2.6%
2021
6.7%
420%
3.4%
54.55% 53.82%
27.40% 28.72%
349.25%
Observation/Interpretatio
n
Chapter 4 Solutions
INTER. ACCTNG. (LOOSE) W/ALEK+CONNECT
Ch. 4 - The income statement is a change statement....Ch. 4 - What transactions are included in income from...Ch. 4 - Prob. 4.3QCh. 4 - Prob. 4.4QCh. 4 - Prob. 4.5QCh. 4 - What are restructuring costs and where are they...Ch. 4 - Define intraperiod tax allocation. Why is the...Ch. 4 - How are discontinued operations reported in the...Ch. 4 - What is meant by a change in accounting principle?...Ch. 4 - Prob. 4.10Q
Ch. 4 - The correction of a material error discovered in a...Ch. 4 - Define earnings per share (EPS). For which income...Ch. 4 - Prob. 4.13QCh. 4 - Describe the purpose of the statement of cash...Ch. 4 - Prob. 4.15QCh. 4 - Explain what is meant by noncash investing and...Ch. 4 - Distinguish between the direct method and the...Ch. 4 - Prob. 4.18QCh. 4 - Prob. 4.19QCh. 4 - Show the calculation of the following...Ch. 4 - Show the DuPont frameworks calculation of the...Ch. 4 - Prob. 4.22QCh. 4 - Prob. 4.23QCh. 4 - Prob. 4.1BECh. 4 - Multiple -step income statement LO41, LO43 Refer...Ch. 4 - Prob. 4.3BECh. 4 - Multiple -step income statement LO41, LO43 The...Ch. 4 - Prob. 4.5BECh. 4 - Prob. 4.6BECh. 4 - Prob. 4.7BECh. 4 - Discontinued operations LO44 Refer to the...Ch. 4 - Discontinued operations LO44 Refer to the...Ch. 4 - Prob. 4.10BECh. 4 - Prob. 4.11BECh. 4 - Prob. 4.12BECh. 4 - Statement of cash flows; indirect method LO48 Net...Ch. 4 - Prob. 4.14BECh. 4 - Prob. 4.15BECh. 4 - Profitability ratios LO410 The 2018 income...Ch. 4 - Prob. 4.17BECh. 4 - Inventory turnover ratio LO410 During 2018, Rogue...Ch. 4 - Operating versus Nonoperating Income LO41 Pandora...Ch. 4 - Income statement format; single step and multiple...Ch. 4 - Income statement format; single step and multiple...Ch. 4 - Multiple-step continuous statement of...Ch. 4 - Income statement presentation LO41, LO45 The...Ch. 4 - Prob. 4.6ECh. 4 - Income statement presentation; discontinued...Ch. 4 - Discontinued operations; disposal in subsequent...Ch. 4 - Discontinued operations; disposal in subsequent...Ch. 4 - Earnings per share LO45 The Esposito Import...Ch. 4 - Comprehensive income LO46 The Massoud Consulting...Ch. 4 - Prob. 4.12ECh. 4 - Prob. 4.13ECh. 4 - IFRS; statement of cash flows LO48, LO49 Refer to...Ch. 4 - Prob. 4.15ECh. 4 - Prob. 4.16ECh. 4 - Statement of cash flows; indirect method LO48...Ch. 4 - Prob. 4.18ECh. 4 - Prob. 4.19ECh. 4 - Statement of cash flows; indirect method LO48...Ch. 4 - Statement of cash flows; direct method LO48 Refer...Ch. 4 - Prob. 4.22ECh. 4 - Prob. 4.23ECh. 4 - Concepts; terminology LO41, LO42, LO43, LO44,...Ch. 4 - Inventory turnover; calculation and evaluation ...Ch. 4 - Evaluating efficiency of asset management LO410...Ch. 4 - Profitability ratios LO410 The following...Ch. 4 - Prob. 4.28ECh. 4 - Prob. 4.29ECh. 4 - Prob. 4.30ECh. 4 - Prob. 4.31ECh. 4 - Prob. 4.32ECh. 4 - Comparative income statements; multiple-step...Ch. 4 - Discontinued operations LO44 The following...Ch. 4 - Income statement presentation; Discontinued...Ch. 4 - Restructuring costs; Discontinued operations;...Ch. 4 - Income statement presentation; Restructuring...Ch. 4 - Income statement presentation; Discontinued...Ch. 4 - Income statement presentation; statement of...Ch. 4 - Multiple-step statement of income and...Ch. 4 - Statement of cash flows LO48 The Diversified...Ch. 4 - Integration of financial statements; Chapters 3...Ch. 4 - Statement of cash flows; indirect method LO48...Ch. 4 - Calculating activity and profitability ratios ...Ch. 4 - Use of ratios to compare two companies in the same...Ch. 4 - Creating a balance sheet from ratios; Chapters 3...Ch. 4 - Prob. 4.15PCh. 4 - Interim financial reporting Appendix 4 Branson...Ch. 4 - Prob. 4.1BYPCh. 4 - Judgment Case 42 Restructuring costs LO43 The...Ch. 4 - Prob. 4.3BYPCh. 4 - Prob. 4.4BYPCh. 4 - Prob. 4.5BYPCh. 4 - Prob. 4.6BYPCh. 4 - Prob. 4.7BYPCh. 4 - IFRS Case 48 Statement of cash flows;...Ch. 4 - Judgment Case 49 Income statement presentation;...Ch. 4 - Prob. 4.10BYPCh. 4 - Integrating Case 412 Balance sheet and income...Ch. 4 - Prob. 4.13BYPCh. 4 - Prob. 4.17BYPCh. 4 - Prob. 4.18BYPCh. 4 - Continuing Cases Target Case LO43, LO44, LO46,...
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- 28 A company's income statement reveals the following amounts related to the company's operations for the most recent year: • Net sales revenue: $5,000,000 • Interest expense: $60,000 • Income tax expense: $80,000 • Net income: $400,000 What was the company's times-interest-earned ratio for the year? 4.33 O 6.75 O 7.67 9.00 NEXT. BOOKMARKarrow_forward2018 calculate: Net profit margin Gross profit margin Current ratio Quick ratio Debt ratio Interest coverage ratio Dividend yield Earnings per share 1-profit- 233.2 thousand 1-revenue 2- gross profit- 1,470.2 mil 2- revenue- 6,854.3 m 3- current assets- 1.210.5 m 3- current liabilities- 917.2 m 4- current assets 4- inventory- 891.1 m 4- current liabilities 5- total debts- 1.544.1m 5- total assets 2,491.7 m 6- operating profit- 334.5 m 6- interest expense/ finance cost- 16.6 m 7- annual dvidends per share- 203.1CPS 7- current share price- 35.6 milarrow_forwardAssume the following sales data for a company: 2018 $980,000 2017 875,000 2016 700,000 If 2016 is the base year, what is the percentage increase in sales from 2016 to 2017? a. 125% b. 25% C. 140% d. 40%arrow_forward
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