Principles of Accounting Volume 1
19th Edition
ISBN: 9781947172685
Author: OpenStax
Publisher: OpenStax College
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Textbook Question
Chapter 1, Problem 16Q
The Dow Jones Industrial Average (DJIA) is often cited as a key metric for business activity. The average is a mathematical formula that uses the stock prices of thirty companies traded on the New York Stock Exchange (NYSE) and the National Association of Securities Dealers Automated Quotation (NASDAQ) system.
A. Identify several of the companies that are included in the DJIA.
B. Explain why this metric might be commonly used to measure business activity.
C. Research the history of the DJIA and note some interesting facts. When did the Dow begin? What was the first value? What was the lowest value? The following is an example of a website that may be helpful: http://www.dow-jones-djia.com/history-of-dow-jones-industrial-average-index/.
D. What is the current value of the DJIA? What factors might contribute to the difference between early and current values of the DJIA?
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Summary: Select One Company listed in Muscat securities market Download the income and Balance sheet of that company Calculate the following ratios a. Gross profit ration
b.Net Profit ratio
c. Current Ratio
d. Liquid ratio.
Analyze the ratios and give you a report on the same.
Give a brief description of the company in your own words.
Most investors and analysts in the financial community pay particular attention to a company's ROE. The ROE can be calculated simply by dividing a
firm's net income by the firm's shareholder's equity, and it can be subdivided into the key factors that drive the ROE. Investors and analysts focus on
these drivers to develop a clearer picture of what is happening within a company. An analyst gathered the following data and calculated the various
terms of the DuPont equation for three companies:
Company A
Company B
Company C
ROE
12.0%
15.5%
21.5%
Profit Margin
57.3%
58.2%
58.0%
X Total Assets Turnover X Equity Multiplier
9.8
10.2
10.3
2.14
2.61
3.60
Referring to these data, which of the following conclusions will be true about the companies' ROES?
O The main driver of Company A's inferior ROE, as compared with that of Company B's and Company C's ROE, is its use of higher debt
financing.
O The main driver of Company C's superior ROE, as compared with that of Company A's and Company B's ROE,…
What does it mean if a company ratio's are below or above industry average?
Please see attached scans depicting company data and industry averages.
Chapter 1 Solutions
Principles of Accounting Volume 1
Ch. 1 - Accounting is sometimes called the language of...Ch. 1 - Financial accounting information ________. A....Ch. 1 - External users of financial accounting information...Ch. 1 - Which of the following groups would have access to...Ch. 1 - All of the following are examples of managerial...Ch. 1 - Which of the following is not true? A....Ch. 1 - The primary purpose of what type of business is to...Ch. 1 - Which of the following is not an example of a...Ch. 1 - A governmental agency can best be described by...Ch. 1 - Which of the following is likely not a type of...
Ch. 1 - Which of the following is not considered a...Ch. 1 - Stockholders can best be defined as which of the...Ch. 1 - Which of the following sell stock on an organized...Ch. 1 - All of the following are sustainable methods...Ch. 1 - The accounting information of a privately held...Ch. 1 - Which of the following skills/attributes is not a...Ch. 1 - Which of the following is typically required for...Ch. 1 - Typical accounting tasks include all of the...Ch. 1 - What type of organization primarily offers tax...Ch. 1 - Most states require 150 semester hours of college...Ch. 1 - Research your top five career choices. Identify...Ch. 1 - Using the same top five career choices, identify...Ch. 1 - Think about a recent purchase you made. Describe...Ch. 1 - Computerized accounting systems help businesses...Ch. 1 - The following information was taken from the...Ch. 1 - The following chart shows the price of Netflix...Ch. 1 - Use the internet to research one for-profit, one...Ch. 1 - Use the internet to research one manufacturing,...Ch. 1 - Assume you are considering opening a retail...Ch. 1 - Uber and Lyft are two popular ride-sharing...Ch. 1 - How would you categorize or classify a company...Ch. 1 - Charity Navigator...Ch. 1 - Use the internet to visit the Securities and...Ch. 1 - Imagine that you have just been elected president...Ch. 1 - According to a company press release, on January...Ch. 1 - The Dow Jones Industrial Average (DJIA) is often...Ch. 1 - Many professional certifications now have...Ch. 1 - The Certified Public Accountant (CPA) exam is a...
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- If you want an indication of the direction a business is taking, you would usea. benchmarking.b. trend percentages.c. industry analysis.d. vertical analysis.arrow_forwardStock exchanges want to be sure that investors have enough information to Select one: O a. Increase a company's performance and prospects O b. Evaluate a company's performance and prospects O c. Decrease a company's performance and prospects d. Evaluate a company's assets and liabilitiesarrow_forwardInterpretation of the Ratios: This section should include interpretation of the company's ratios along with the trend graphs, and explain how these values can have an impact on the management, operations & stockholders with respect to time series analysis.arrow_forward
- What is the basic purpose for examining trends in a company’s financial ratios and other data?arrow_forwardWhat are financial ratios? Using numerical values from financial statements, financial ratios are created to obtain useful information about a company. Using the numbers on a company's balance sheet, income statement, and cash flow statement, quantitative analysis of a company's liquidity, leverage, growth, margins, profitability, rates of return, valuation, and other factors can be performed. Financial analysis ratio is used for 2 main purpose; to track the company’s performance and to make comparative judgements of the company performance. Users from outside: Retail investors, financial analysts, creditors, rivals, tax and regulatory authorities, and industry observers are internal users. Owners, employees, and the management team.arrow_forwardDuPont system of analysis Use the following financial information for AT&T and Verizon to conduct a DuPont system of analysis for each company. Sales Earnings available for common stockholders Total assets Stockholders' equity a. Which company has the higher net profit margin? Higher asset turnover? b. Which company has the higher ROA? The higher ROE? c. Which company has the higher financial leverage multiplier? a. Net profit margin (Round to three decimal places.) AT&T Net profit margin AT&T $164,000 13,333 403,921 201,934 Verizon Verizon $126,280 13,608 244,280 24,232arrow_forward
- A common-size balance sheet shows the firm's assets and liabilities as a percentage of ____. a. stockholders' equity b. total assets c. industry averages d. net salesarrow_forwardSet out and explain how the p/e ratio provides a shorthand guide to the market’s assessment of a firm’s business prospects.arrow_forwardWhich of the following types of analysis compares one corporation to another corpora ion and to industry averages? a. timetable analysis c. company analysis b. time series analysis d. cross sectional analysisarrow_forward
- 1. What are some of the tests of a sound or healthy long-term financial position? 2. Give some indications of managerial efficiency in the use of company resources. 3. What are the most commonly used techniques in the analysis and interpretation of financial statements? 4. What are the steps involved in using trend percentages in financial analysis? 5. Distinguish between horizontal and vertical analysis of financial statement data 6. What is the basic objective in looking at trends in financial ratios and other data? 7. Define trendpercentages 8. Discuss the steps in analyzing financial statements using trend percentages. 9. In financial statement analysis, what is the basic objective of observing trends in data and ratios? Suggest some other standards of comparison. 10. Distinguish between trend percentages and component percentages. 11. Which would be better suited for analyzing the change in sales over a term of several years? 12. Nets sales of the Premiere General Store have been…arrow_forwardWhat is the basic purpose for examining trends in a company’s financial ratios and other data? What other kinds of comparisons might an analyst make?arrow_forwardFrom curiosity, what graphs are made to indicate the financial performance of a company?arrow_forward
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