Ratios Analyzing Long-Term Firm SolvencyThe following information is available for Banner Company: Annual Data Current Year Previous Year Interest expense $85,000 $82,000 Income tax expense 203,500 185,000 Net income 496,500 425,000 Capital expenditures 320,000 380,000 Cash provided by operating activities 450,000 390,000 Year-End Data Dec. 31,Current Year Dec. 31,Previous Year Total liabilities $2,400,000 $1,900,000 Total stockholders’ equity 4,200,000 3,800,000 Calculate the following: Note: Round all answers to two decimal places. Current Year times-interest-earned ratio.Answer
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Ratios Analyzing Long-Term Firm Solvency
The following information is available for Banner Company:
| Annual Data | Current Year | Previous Year |
|---|---|---|
| Interest expense | $85,000 | $82,000 |
| Income tax expense | 203,500 | 185,000 |
| Net income | 496,500 | 425,000 |
| Capital expenditures | 320,000 | 380,000 |
| Cash provided by operating activities | 450,000 | 390,000 |
| Year-End Data | Dec. 31, Current Year |
Dec. 31, Previous Year |
|---|---|---|
| Total liabilities | $2,400,000 | $1,900,000 |
| Total |
4,200,000 | 3,800,000 |
Calculate the following:
Note: Round all answers to two decimal places.
Current Year times-interest-earned ratio.
Answer
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- Ratios Analyzing Firm ProfitabilityThe following information is available for Buhler Company: Annual Data Current Year Previous Year Net sales $8,800,000 $8,200,000 Gross profit on sales 3,053,000 2,736,000 Net income 567,600 488,000 Dec. 31, Dec. 31, Year-End Data Current Year Previous Year Total assets $6,700,000 $6,300,000 Stockholders' equity 3,800,000 3,200,000 Calculate the following ratios for the current year: Note: Round answers to one decimal place, unless otherwise noted. a. Gross profit percentageAnswer%b. Return on salesAnswer%c. Asset turnover (Round answer to two decimal places.)Answerd. Return on assetsAnswer%e. Return on common stockholders' equity (Buhler Company has no preferred stock.)Answer% PreviousSave AnswersNextRatios Analyzing Long-Term Firm SolvencyThe following information is available for Antler Company: Annual Data Current Year Previous Year Interest expense $98,000 $82,000 Income tax expense 213,500 185,000 Net income 506,500 395,000 Capital expenditures 330,000 400,000 Cash provided by operating activities 435,000 390,000 Year-End Data Dec. 31,Current Year Dec. 31,Previous Year Total liabilities $2,200,000 $1,900,000 Total stockholders' equity 4,000,000 3,600,000 Calculate the following: Note: Round all answers to two decimal places.a. Current Year debt-to-equity ratio.Answerb. Current Year times-interest-earned ratio.Answerc. Current Year operating-cash-flow-to-capital-expenditures ratio.AnswerDIRECTION: Compute the following PROFITABILITY RATIOS Gross Margin= Gross Profit/Net Sales Net Profit Margin= Net Profit/ Net Sales Return on Equity= Profit/Shareholder's Equity Return on Asset= Profit/Total Asset TREND ANALYSIS Net Income Growth Rate Total Assets Growth Rate And also compute the percentage beside the columns December 31, December 31, PERCENTAGE 2021 2020 USD USD Assets Current assets Cash and cash equivalents 34,115,412 25,681,845 Short-term financial instruments 71,417,748 80,798,680 Short-term financial assets at amortized cost 2,944,705 2,409,853 Short-term financial assets at fair value through profit or loss 35,624 62,452 Trade receivables 35,585,565 27,065,012 Non-trade receivables 3,930,828 3,150,548 Prepaid expenses 2,042,001 1,980,685 Inventories 36,172,043 28,007,314 Other current assets 4,441,629 3,281,589 Assets held-for-sale - 812,370 Total Current Assets…
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- Data for Lozano Chip Company and its industry averages follow. Calculate the indicated ratios for Lozano. Construct the extended DuPont equation for both Lozano and the industry. Outline Lozano’s strengths and weaknesses as revealed by your analysis. Lozano Chip Company: Balance Sheet as of December 31, 2019 (Thousands of Dollars) Lozano Chip Company: Income Statement for Year Ended December 31, 2019 (Thousands of Dollars)Financial leverage MicrosoCortrepotied (MSFT) reported the following data (in millions) for a tern year Compute the profit margin, asset turnover, and financial leverage metrics using the expandedDuPont formula. Round profit margin, asset turnover, and financial leverage to two decimalplaces.Round return on stockholders’ equity to one decimal place.Effect of transactions on current position analysis Data pertaining to the current position of Newlan Company are as follows: Instructions Compute (a) the working capital, (h) the current ratio, and (c) the quick ratio.
- Effect of Industry Characteristics on Financial Statement Relations: A Global Perspective. Effective financial statement analysis requires an understanding of a firms economic characteristics. The relations between various financial statement items provide evidence of many of these economic characteristics. Exhibit 1.24 (pages 6667) presents common-size condensed balance sheets and income statements for 12 firms in different industries. These common-size balance sheets and income statements express various items as a percentage of operating revenues. (That is, the statement divides all amounts by operating revenues for the year.) A dash for a particular financial statement item does not necessarily mean the amount is zero. It merely indicates that the amount is not sufficiently large for the firm to disclose it. A list of the 12 companies, the country of their headquarters, and a brief description of their activities follow. A. Accor (France): Worlds largest hotel group, operating hotels under the names of Sofitel, Novotel, Motel 6, and others. Accor has grown in recent years by acquiring established hotel chains. B. Carrefour (France): Operates grocery supermarkets and hypermarkets in Europe, Latin America, and Asia. C. Deutsche Telekom (Germany): Europes largest provider of wired and wireless telecommunication services. The telecommunications industry has experienced increased deregulation in recent years. D. E.ON AG (Germany): One of the major public utility companies in Europe and the worlds largest privately owned energy service provider. E. Fortis (Netherlands): Offers insurance and banking services. Operating revenues include insurance premiums received, investment income, and interest revenue on loans. Operating expenses include amounts actually paid or amounts it expects to pay in the future on insurance coverage outstanding during the year. F. Interpublic Group (U.S.): Creates advertising copy for clients. Interpublic purchases advertising time and space from various media and sells it to clients. Operating revenues represent the commissions or fees earned for creating advertising copy and selling media time and space. Operating expenses include employee compensation. G. Marks Spencer (U.K.): Operates department stores in England and other retail stores in Europe and the United States. Offers its own credit card for customers purchases. H. Nestl (Switzerland): Worlds largest food processor, offering prepared foods, coffees, milk-based products, and mineral waters. I. Roche Holding (Switzerland): Creates, manufactures, and distributes a wide variety of prescription drugs. J. Sumitomo Metal (Japan): Manufacturer and seller of steel sheets and plates and other construction materials. K. Sun Microsystems (U.S.): Designs, manufactures, and sells workstations and servers used to maintain integrated computer networks. Sun outsources the manufacture of many of its computer components. L. Toyota Motor (Japan): Manufactures automobiles and offers financing services to its customers. REQUIRED Use the ratios to match the companies in Exhibit 1.24 with the firms listed above.Effect of Industry Characteristics on Financial Statement Relations. Effective financial statement analysis requires an understanding of a firms economic characteristics. The relations between various financial statement items provide evidence of many of these economic characteristics. Exhibit 1.22 (pages 6061) presents common-size condensed balance sheets and income statements for 12 firms in different industries. These common-size balance sheets and income statements express various items as a percentage of operating revenues. (That is, the statement divides all amounts by operating revenues for the year.) Exhibit 1.22 also shows the ratio of cash flow from operations to capital expenditures. A dash for a particular financial statement item does not necessarily mean the amount is zero. It merely indicates that the amount is not sufficiently large enough for the firm to disclose it. Amounts that are not meaningful are shown as n.m. A list of the 12 companies and a brief description of their activities follow. A. Amazon.com: Operates websites to sell a wide variety of products online. The firm operated at a net loss in all years prior to that reported in Exhibit 1.22. B. Carnival Corporation: Owns and operates cruise ships. C. Cisco Systems: Manufactures and sells computer networking and communications products. D. Citigroup: Offers a wide range of financial services in the commercial banking, insurance, and securities business. Operating expenses represent the compensation of employees. E. eBay: Operates an online trading platform for buyers to purchase and sellers to sell a variety of goods. The firm has grown in part by acquiring other companies to enhance or support its online trading platform. F. Goldman Sachs: Offers brokerage and investment banking services. Operating expenses represent the compensation of employees. G. Johnson Johnson: Develops, manufactures, and sells pharmaceutical products, medical equipment, and branded over-the-counter consumer personal care products. H. Kelloggs: Manufactures and distributes cereal and other food products. The firm acquired other branded food companies in recent years. I. MGM Mirage: Owns and operates hotels, casinos, and golf courses. J. Molson Coors: Manufactures and distributes beer. Molson Coors has made minority ownership investments in other beer manufacturers in recent years. K. Verizon: Maintains a telecommunications network and offers telecommunications services. Operating expenses represent the compensation of employees. Verizon has made minority investments in other cellular and wireless providers. L. Yum! Brands: Operates chains of name-brand restaurants, including Taco Bell, KFC, and Pizza Hut. REQUIRED Use the ratios to match the companies in Exhibit 1.22 with the firms listed above.Ratio Analysis Consider the following information taken from the stockholders equity section: How do you interpret the companys payout and profitability performance? Required: 1. Calculate the following for 2020. (Note. Round answers to two decimal places.) 2. CONCEPTUAL CONNECTION Assume 2019 ratios were: and the current year industry averages are: How do you interpret the companys payout and profitability performance?
