Corporate Financial Accounting
15th Edition
ISBN: 9781337398169
Author: Carl Warren, Jeff Jones
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Question
Chapter 7, Problem 7.3MAD
(a)
To determine
Days’ cash on hand: This is a financial metric which measures number of days a company would pay its cash operating expenses, if revenue declines. Days’ cash on hand of 50 days or greater is considered to be ideal.
Formula to compute days’ cash on hand:
To compute: Days’ cash on hand for Corporation A for the Years 1, 2, and 3
(b)
To determine
To interpret: The values computed in Part (a)
(c)
To determine
To mention: Some ways for a liquidity squeeze
Expert Solution & Answer
Trending nowThis is a popular solution!
Students have asked these similar questions
Capstone Turbine Corporation produces and sells turbine generators for such applications as charging electric, hybrid vehicles. Capstone Turbine reported the following financial data for a recent year (in thousands):
Net cash flows from operating activities $(23,018) Cash and cash equivalents 32,221
a. Determine the monthly cash expenses. Round to one decimal place.b. Determine the ratio of cash to monthly cash expenses. Round to one decimal place.c. Based on your analysis, do you believe that Capstone Turbine will remainin business?
Alyeska Services Company, a division of a major oil company, provides various services to the operators of the North Slope oil field in Alaska. Data concerning the most recent year appear below:
Sales
$ 18,900,000
Net operating income
$ 4,400,000
Average operating assets
$ 35,500,000
Required:
1. Compute the margin for Alyeska Services Company. (Round your answer to 2 decimal places.)
2. Compute the turnover for Alyeska Services Company. (Round your answer to 2 decimal places.)
3. Compute the return on investment (ROI) for Alyeska Services Company. (Round your intermediate calculations and final answer to 2 decimal places.)
Alyeska Services Company, a division of a major oil company, provides various services to the operators of the North Slope oil field in Alaska. Data concerning the most recent year appear below:
Sales
$
17,200,000
Net operating income
$
5,600,000
Average operating assets
$
36,300,000
Required:
1. Compute the margin for Alyeska Services Company. (Round your answer to 2 decimal places.)
2. Compute the turnover for Alyeska Services Company. (Round your answer to 2 decimal places.)
3. Compute the return on investment (ROI) for Alyeska Services Company. (Round your intermediate calculations and final answer to 2 decimal places.)
1.
Margin
not attempted
%
2.
Turnover
not attempted
3.
ROI
not attempted
%
Chapter 7 Solutions
Corporate Financial Accounting
Ch. 7 - Prob. 1DQCh. 7 - Prob. 2DQCh. 7 - Prob. 3DQCh. 7 - Why should the responsibility for maintaining the...Ch. 7 - Assume that Brooke Miles, accounts payable clerk...Ch. 7 - Prob. 6DQCh. 7 - Prob. 7DQCh. 7 - Prob. 8DQCh. 7 - Prob. 9DQCh. 7 - Prob. 10DQ
Ch. 7 - Prob. 7.1BECh. 7 - Prob. 7.2BECh. 7 - Prob. 7.3BECh. 7 - Prob. 7.4BECh. 7 - Days cash on hand Financial statement data for...Ch. 7 - Prob. 7.1EXCh. 7 - Prob. 7.2EXCh. 7 - Prob. 7.3EXCh. 7 - Prob. 7.4EXCh. 7 - Prob. 7.5EXCh. 7 - Prob. 7.6EXCh. 7 - Prob. 7.7EXCh. 7 - Prob. 7.8EXCh. 7 - Prob. 7.9EXCh. 7 - Prob. 7.10EXCh. 7 - Prob. 7.11EXCh. 7 - Entry for cash sales; cash short The actual cash...Ch. 7 - Entry for cash sales; cash over The actual cash...Ch. 7 - Internal control of cash payments Abbe Co. is a...Ch. 7 - Prob. 7.15EXCh. 7 - Prob. 7.16EXCh. 7 - Prob. 7.17EXCh. 7 - Prob. 7.18EXCh. 7 - Prob. 7.19EXCh. 7 - Prob. 7.20EXCh. 7 - Prob. 7.21EXCh. 7 - Prob. 7.22EXCh. 7 - Prob. 7.23EXCh. 7 - Prob. 7.24EXCh. 7 - Prob. 7.1APRCh. 7 - Prob. 7.2APRCh. 7 - Prob. 7.3APRCh. 7 - Prob. 7.4APRCh. 7 - Prob. 7.5APRCh. 7 - Prob. 7.1BPRCh. 7 - Prob. 7.2BPRCh. 7 - Prob. 7.3BPRCh. 7 - Prob. 7.4BPRCh. 7 - Prob. 7.5BPRCh. 7 - Analyze and compare Amazon.com to Netflix...Ch. 7 - Analyze and compare J. C. Penney and Macys J. C....Ch. 7 - Prob. 7.3MADCh. 7 - Prob. 7.4MADCh. 7 - Prob. 7.5MADCh. 7 - Ethics in Action Tehra Dactyl is an accountant for...Ch. 7 - Bank error During the preparation of the bank...Ch. 7 - Prob. 7.4TIFCh. 7 - Prob. 7.5TIF
Knowledge Booster
Similar questions
- Mike Sanders is considering the purchase of Kepler Company, a firm specializing in the manufacture of office supplies. To be able to assess the financial capabilities of the company, Mike has been given the companys financial statements for the 2 most recent years. Required: Note: Round all answers to two decimal places. 1. Compute the following for each year: (a) return on assets, (b) return on stockholders equity, (c) earnings per share, (d) price-earnings ratio, (e) dividend yield, and (f ) dividend payout ratio. 2. CONCEPTUAL CONNECTION Based on the analysis in Requirement 1, would you invest in the common stock of Kepler?arrow_forwardDeere Company (DE) manufactures and distributes farm and construction machinery that it sells around the world. In addition to its manufacturing operations, Deeres credit division loans money to customers to finance the purchase of their farm and construction equipment. The following information is available for three recent years (in millions except per-share amounts): 1. Calculate the following ratios for each year. Round ratios and percentages to one decimal place, except for per-share amounts, which should be rounded to the nearest cent. a. Return on total assets b. Return on stockholders' equity c. Earnings per share d. Dividend yield e. Price-earnings ratio 2. Based on these data, evaluate Deeres profitability.arrow_forwardNeiman Marcus Group (NMG) is one of the largest luxury fashion retailers in the world. Kohls Corporation (KSS) sells moderately priced private and national branded products through more than 1,100 department stores located throughout the United States. The current assets and current liabilities at the end of a recent year for both companies are as follows (in millions): a. Would an analysis of working capital between the two companies be meaningful? Explain. b. Compute the quick ratio for both companies. Round to one decimal place. c. Interpret your results.arrow_forward
- Alyeska Services Company, a division of a major oil company, provides various services to the operators of the North Slope oil field in Alaska. Data concerning the most recent year appear below: Sales $ 17,100,000 Net operating income $ 6,100,000 Average operating assets $ 35,000,000 Required: 1. Compute the margin for Alyeska Services Company. (Round your answer to 2 decimal places.) 2. Compute the turnover for Alyeska Services Company. (Round your answer to 2 decimal places.) 3. Compute the return on investment (ROI) for Alyeska Services Company. (Round your intermediate calculations and final answer to 2 decimal places.) 1- Margin % 2- Turover 3- ROI %arrow_forwardAlyeska Services Company, a division of a major oil company, provides various services to the operators of the North Slope oil field in Alaska. Data concerning the most recent year appear below: Sales $ 17,400,000 Net operating income $ 5,500,000 Average operating assets $ 35,400,000 Required: 1. Compute the margin for Alyeska Services Company. (Round your answer to 2 decimal places.) 2. Compute the turnover for Alyeska Services Company. (Round your answer to 2 decimal places.) 3. Compute the return on investment (ROI) for Alyeska Services Company. (Round your intermediate calculations and final answer to 2 decimal places.) 1. Margin % 2. Turnover 3. ROI %arrow_forwardCharles Schwab Corporation (SCHW) is one of the more innovative brokerage and financial service companies in the United States. The company recently provided information about its major business segments as follows (in millions): InvestorServices AdvisorServices Revenues $5,411 $2,067 Operating income 2,031 962 Depreciation 180 54 Investor Services(in millions) Advisor Services(in millions) Estimated contribution margin 2211 1016 d. If Schwab decided to sell its “Advisor Services” accounts to another company, estimate how much operating income would decline under the following assumptions. Assume the fixed costs that serve Advisor investors would not be sold but would be used by the other sector: ____________ Assume the fixed assets were “sold”: ________________arrow_forward
- ABC Turbine Corporation produces and sells turbine generators for such applications as charging electric, hybrid vehicles. ABC Turbine report following financial data for a recent year (in thousands ) Net cash flows from operating activities xi(1, 680) Cash and cash equivalents 4,060 a. Determine the monthly cash expenses thousands b. Determine the ratio of cash to monthly cash expenses months . Based on your analysis, do you believe that ABC Turbine will remain in business?arrow_forwardDeere & Company manufactures and distributes farm and construction machinery that it sells around the world. In addition to its manufacturing operations, Deere’s credit division loans money to customers to finance the purchase of their farm and construction equipment.The following information is available for three recent years (in millions except pershare amounts): Please see the attachment for details: 1. Calculate the following ratios for each year, rounding ratios and percentages to one decimal place, except for per-share amounts:a. Return on total assetsb. Return on stockholders’ equityc. Earnings per shared. Dividend yielde. Price-earnings ratio2. Based on these data, evaluate Deere’s profitability.arrow_forwardHalliburton and Schlumberger compete in the oil field services sector. Refer to the following 2018 financial data for the two companies to answer the requirements. $ millions HAL SLB Total revenue $21,596 $29,534 Pretax net nonoperating expense 588 383 Net income 1,740 2,286 Average operating assets 24,529 71,228 Average operating liabilities 5,299 14,849 Marginal tax rate 22% 19% Return on equity 18.56% 5.86% a. Compute return on net operating assets (RNOA) for each company.b. Disaggregate RNOA into net operating profit margin (NOPM) and net operating asset turnover (NOAT) for each company.Do not round until your final answer. Round answers to two decimal places (percentage example: 0.12345 = 12.35%). HAL SLB RNOA Answer Answer NOPM Answer Answer NOAT Answer Answerarrow_forward
- Please help me with this question :) A detailed answer will be much appreciated. ABC Ltd, a construction company, earned $5 million in after-tax operating income in the most recent year. The firm also had fixed cost investment (ie cash involvement related to the capital expenditure for the year) of $4 million and depreciation of $2 million during the year. Working capital at the end of the year was $10 million. The firm also had $15 million in outstanding debt and a pretax cost of debt of 8%. There were 10 million shares outstanding trading at $2 per share, and the most recent beta is 1.10. The tax rate for the firm is 40%, the treasury bond rate is 7% and return on the market is 12.5%. a) Estimate the firm’s weighed average cost of capital (WACC). b) Assuming that the firm’s operating income will grow 10 percent for the next three years, and that the fixed cost investment, depreciation, and working capital will grow at the same rate, estimate the FCFF and its present value…arrow_forwardCompute returns on assets for AT&T and Verizon and answer the question below. Be sure to show your work. Key figures($ millions). AT&T Verizon Sales 126,723 110,875 Net Income 4,184 10,198 Average Assets 269,868 225,233 AT&T Verizon Which company is more successful in returning net income from its assets invested?arrow_forwardPermian Partners (PP) produces from aging oil fields in west Texas. Production is 1.92 million barrels per year in 2018, but production is declining at 9% per year for the foreseeable future. Costs of production, transportation, and administration add up to $26.20 per barrel. The average oil price was $66.20 per barrel in 2018.PP has 8.2 million shares outstanding. The cost of capital is 11%. All of PP’s net income is distributed as dividends. For simplicity, assume that the company will stay in business forever and that costs per barrel are constant at $26.20. Also, ignore taxes.a. Assume that oil prices are expected to fall to $61.20 per barrel in 2019, $56.20 per barrel in 2020, and $51.20 per barrel in 2021. After 2021, assume a long-term trend of oil-price increases at 7% per year. What is the ending 2018 value of one PP share? (Do not round intermediate calculations. Round your answer to 2 decimal places.) b-1. What is PP’s EPS/P ratio? (Do not round intermediate calculations.…arrow_forward
arrow_back_ios
arrow_forward_ios
Recommended textbooks for you
Financial And Managerial AccountingAccountingISBN:9781337902663Author:WARREN, Carl S.Publisher:Cengage Learning,
Intermediate Financial Management (MindTap Course...FinanceISBN:9781337395083Author:Eugene F. Brigham, Phillip R. DavesPublisher:Cengage Learning
Financial Reporting, Financial Statement Analysis...FinanceISBN:9781285190907Author:James M. Wahlen, Stephen P. Baginski, Mark BradshawPublisher:Cengage Learning
Financial And Managerial Accounting
Accounting
ISBN:9781337902663
Author:WARREN, Carl S.
Publisher:Cengage Learning,
Intermediate Financial Management (MindTap Course...
Finance
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Cengage Learning
Financial Reporting, Financial Statement Analysis...
Finance
ISBN:9781285190907
Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher:Cengage Learning