Connect Access Card for Financial Accounting: Information and Decisions
8th Edition
ISBN: 9781259662966
Author: John J Wild
Publisher: McGraw-Hill Education
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Question 2Alex is currently considering to invest his money in one of the companies between Company A and Company B. The summarized final accounts of the companies for their last completed financial year are as follows:
a. Calculate the following ratios for Company A and Company B. State clearly the formulae used for each ratio:
i. Gross Profit Marginii. Net Profit Marginiii. Inventory Turnover Period (days)iv. Receivables Collection Period (days)
The 2024 income statement of Adrian Express reports sales of $20,310,000, cost of goods sold of $12,500,000, and net income of
$1,900,000. Balance sheet information is provided in the following table.
Assets
Current assets:
Cash
Accounts receivable
Inventory
ADRIAN EXPRESS
Balance Sheets
December 31, 2024 and 2023
Long-term assets
Total assets
Liabilities and Stockholders' Equity
Current liabilities
Long-term Liabilities
Common stock
Retained earnings
Total liabilities and stockholders' equity
Industry averages for the following four risk ratios are as follows:
Gross profit ratio
Return on assets
Profit margin
Asset turnover
Return on equity
45%
25%
15%
6.5
35%
tines
2024
2023
$800,000
$910,000
1,725,000 1,175,000
2,175,000
1,625,000
5,000,000 4,390,000
$9,700,000 $8,100,000
$2,030,000 $1,820,000
2,490,000 2,560,000
2,025,000 1,975,000
3,155,000 1,745,000
$9,700,000 $8,100,000
Compute profit margin for each of the 3 separate companies. Which company is the most profitable based on the profit margin ratio?
Net income
Net sales
Total assets
Kerr
$ 6,450
43,000
48,000
Jax
$ 1,640
41,000
45,000
Profit Margin Conclusion
Bron
$ 3,420
38,000
43,000
Complete this question by entering your answers in the tabs below.
Compute profit margin for each of the 3 separate companies.
Company Profit Margin (%)
Kerr
Jax
Bron
Chapter 9 Solutions
Connect Access Card for Financial Accounting: Information and Decisions
Ch. 9 - Prob. 1DQCh. 9 - Prob. 2DQCh. 9 - Prob. 3DQCh. 9 - Prob. 4DQCh. 9 - What is the combined amount (in percent) of the...Ch. 9 - What is the current Medicare tax rate? This rate...Ch. 9 - Prob. 7DQCh. 9 - Prob. 8DQCh. 9 - Prob. 9DQCh. 9 - Why are warranty liabilities usually recognized on...
Ch. 9 - Prob. 11DQCh. 9 - Prob. 12DQCh. 9 - Prob. 13DQCh. 9 - Prob. 14DQCh. 9 - Prob. 15DQCh. 9 - Prob. 16DQCh. 9 - Prob. 17DQCh. 9 - Prob. 1QSCh. 9 - Prob. 2QSCh. 9 - Ticketsales, Inc., receives $5,000,000 cash in...Ch. 9 - Prob. 4QSCh. 9 - Prob. 5QSCh. 9 - Prob. 6QSCh. 9 - Prob. 7QSCh. 9 - Prob. 8QSCh. 9 - Prob. 9QSCh. 9 - Prob. 10QSCh. 9 - Prob. 11QSCh. 9 - Prob. 12QSCh. 9 - Sera Corporation has made and recorded its...Ch. 9 - Prob. 1ECh. 9 - Prob. 2ECh. 9 - Prob. 3ECh. 9 - Interest-bearing notes payable with year-end...Ch. 9 - Prob. 5ECh. 9 - Prob. 6ECh. 9 - Prob. 7ECh. 9 - Prob. 8ECh. 9 - Prob. 9ECh. 9 - Hitzu Co. sold a copier costing $4,800 with a...Ch. 9 - Prob. 11ECh. 9 - Prob. 12ECh. 9 - Accounting for contingent liabilities C3 Prepare...Ch. 9 - Prob. 14ECh. 9 - Prob. 15ECh. 9 - Prob. 16ECh. 9 - Prob. 18ECh. 9 - Prob. 1PSACh. 9 - Prob. 2PSACh. 9 - Prob. 3PSACh. 9 - Prob. 4PSACh. 9 - Prob. 5PSACh. 9 - Entries for payroll transactions P2 P3 P5...Ch. 9 - Prob. 1PSBCh. 9 - Prob. 2PSBCh. 9 - Fishing Guides Co. has four employees. FICA Social...Ch. 9 - Prob. 4PSBCh. 9 - Shown here are condensed income statements for two...Ch. 9 - Prob. 6PSBCh. 9 - Prob. 9SPCh. 9 - Refer to the financial statements of Apple in...Ch. 9 - Key figures for Apple and Google follow. *Apple...Ch. 9 - Prob. 3BTNCh. 9 - Prob. 5BTNCh. 9 - Assume that your team is in business and you must...Ch. 9 - Prob. 7BTNCh. 9 - Prob. 8BTNCh. 9 - Prob. 9BTN
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