Financial Accounting (12th Edition) (What's New in Accounting)
12th Edition
ISBN: 9780134725987
Author: C. William Thomas, Wendy M. Tietz, Walter T. Harrison Jr.
Publisher: PEARSON
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Chapter 12, Problem 12.21AE
Requirement - 1.a.
To determine
To Compute: The
Requirement 1.b.
To determine
To Compute: The quick (acid-test) ratio for E News Incorporation for the year 2017 and 2018.
Requirement 1.c.
To determine
To Compute: The inventory turnover and days’ inventory outstanding (DIO) for E News Incorporation for the year 2017 and 2018.
Requirement 1.d.
To determine
To Compute: The accounts receivable turnover for E News Incorporation for the year 2017 and 2018.
Requirement 1.e.
To determine
To Compute: The days’ sales outstanding for E News Incorporation for the year 2017 and 2018.
Requirement 1.f.
To determine
To Compute: The accounts payable turnover and days’ payable outstanding (DPO) for E News Incorporation for the year 2017 and 2018.
Requirement 1.g.
To determine
To Compute: The cash conversion cycle (in days) for E News Incorporation for the year 2017 and 2018.
Requirement 2
To determine
To Comment: Whether the above calculated ratios of 2018 has improved or deteriorated from 2017.
Requirement 3
To determine
To Mention: The necessary improvements needed in next year.
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For years ended December 31
Equity Investee Financial Summary,
$ millions
2018
2017
2016
Net sales...
Gross margin
Net income..
Cummins' share of net income.
$7,352
$7,050
$5,654
1,373
1,422
1,182
647
680
499
$ 336
$ 308
$ 260
Royalty and interest income..
58
49
41
Total equity, royalty and interest from investees...
$ 394
$ 357
$ 301
Current assets
$3,401
1,449
$3,416
1,379
Noncurrent assets
Current liabilities..
Noncurrent liabilities..
Net assets...
(2,669)
(218)
(2,567)
(237)
$1,963
$1,991
Cummins' share of net assets
$1,144
$1,116
a. What assets and liabilities of unconsolidated affiliates are omitted from Cummins' balance sheet as a
result of the equity method of accounting for those investments?
b. Do the liabilities of the unconsolidated affiliates affect Cummins directly? Explain.
c. How does the equity method impact Cummins' ROE and its RNOA components (net operating asset
turnover and net operating profit margin)?
Selected information from the 2014 and 2013 financial statements of Sculley Corporation is presented below:
(in thousands)
As of December 31
2014
2013
Cash ...................................
$ 21
$ 35
Marketable securities
(current) ...........
27
22
Accounts receivable (net) ....
60
98
Inventory ............................
105
142
Prepaid expenses .................
5
3
Land and building (net) .........
247
315
Accounts payable ................
57
75
Accrued expenses ...............
10
14
Notes payable (short-term) ...
8
4
Bonds payable .....................
52
66
(in thousands)
As of December 31
2014
2013
Cash sales ...........................
$750
$675
Credit sales (% of cash
sales) .......
82%
85%
Cost of goods sold
(percent…
Selected information from the 2014 and 2013 financial statements of Sculley Corporation is presented below:
(in thousands)
As of December 31
2014
2013
Cash ...................................
$ 21
$ 35
Marketable securities
(current) ...........
27
22
Accounts receivable (net) ....
60
98
Inventory ............................
105
142
Prepaid expenses .................
5
3
Land and building (net) .........
247
315
Accounts payable ................
57
75
Accrued expenses ...............
10
14
Notes payable (short-term) ...
8
4
Bonds payable .....................
52
66
(in thousands)
As of December 31
2014
2013
Cash sales ...........................
$750
$675
Credit sales (% of cash
sales) .......
82%
85%
Cost of goods sold
(percent…
Chapter 12 Solutions
Financial Accounting (12th Edition) (What's New in Accounting)
Ch. 12 - Prob. 1QCCh. 12 - Prob. 2QCCh. 12 - Prob. 3QCCh. 12 - Prob. 4QCCh. 12 - Expressing accounts receivable as a percentage of...Ch. 12 - Kincaid Company reported the following data (in...Ch. 12 - Prob. 7QCCh. 12 - Ratios that measure liquidity include all of the...Ch. 12 - Verba Corporation has an inventory turnover of 15...Ch. 12 - The measure of a companys ability to collect cash...
Ch. 12 - A ratio that measures a companys profitability is...Ch. 12 - Prob. 12QCCh. 12 - Prob. 13QCCh. 12 - Prob. 14QCCh. 12 - Prob. 12.1ECCh. 12 - Prob. 12.1SCh. 12 - Prob. 12.2SCh. 12 - Prob. 12.3SCh. 12 - Prob. 12.4SCh. 12 - Prob. 12.5SCh. 12 - (Learning Objective 4: Evaluate a companys quick...Ch. 12 - Prob. 12.7SCh. 12 - (Learning Objective 4: Measure ability to pay...Ch. 12 - (Learning Objective 4: Measure profitability using...Ch. 12 - Prob. 12.10SCh. 12 - (Learning Objective 4: Use ratio data to...Ch. 12 - Prob. 12.12SCh. 12 - (Learning Objective 4: Analyze a company based on...Ch. 12 - Prob. 12.14SCh. 12 - Prob. 12.15SCh. 12 - Prob. 12.16AECh. 12 - Prob. 12.17AECh. 12 - Prob. 12.18AECh. 12 - Prob. 12.19AECh. 12 - Prob. 12.20AECh. 12 - Prob. 12.21AECh. 12 - Prob. 12.22AECh. 12 - Prob. 12.23AECh. 12 - Prob. 12.24AECh. 12 - Prob. 12.25AECh. 12 - Prob. 12.26AECh. 12 - Prob. 12.27BECh. 12 - Prob. 12.28BECh. 12 - Prob. 12.29BECh. 12 - Prob. 12.30BECh. 12 - Prob. 12.31BECh. 12 - LO 4 (Learning Objective 4: Calculate ratios;...Ch. 12 - Prob. 12.33BECh. 12 - Prob. 12.34BECh. 12 - Prob. 12.35BECh. 12 - Prob. 12.36BECh. 12 - Prob. 12.37BECh. 12 - Prob. 12.38QCh. 12 - Prob. 12.39QCh. 12 - Prob. 12.40QCh. 12 - Prob. 12.41QCh. 12 - Prob. 12.42QCh. 12 - Prob. 12.43QCh. 12 - Prob. 12.44QCh. 12 - Use the Orlando Medical Corporation financial...Ch. 12 - Prob. 12.46QCh. 12 - Use the Orlando Medical Corporation financial...Ch. 12 - Prob. 12.48QCh. 12 - Prob. 12.49QCh. 12 - Prob. 12.50QCh. 12 - Prob. 12.51QCh. 12 - Prob. 12.52QCh. 12 - Prob. 12.53QCh. 12 - Prob. 12.54QCh. 12 - Prob. 12.55QCh. 12 - LO 1, 2, 4 (Learning Objectives 1, 2, 4: Calculate...Ch. 12 - Prob. 12.57APCh. 12 - Prob. 12.58APCh. 12 - LO 4 (Learning Objective 4: Use ratios to evaluate...Ch. 12 - Prob. 12.60APCh. 12 - LO 2, 4, 5 (Learning Objectives 2, 4, 5: Analyze...Ch. 12 - Group B LO 1, 2, 4 (Learning Objectives 1, 2, 4:...Ch. 12 - Prob. 12.63BPCh. 12 - Prob. 12.64BPCh. 12 - LO 4 (Learning Objective 4: Use ratios to evaluate...Ch. 12 - Prob. 12.66BPCh. 12 - LO 2, 4, 5 (Learning Objectives 2, 4, 5: Analyze...Ch. 12 - Prob. 12.68CEPCh. 12 - Prob. 12.69CEPCh. 12 - (Learning Objectives 2, 3.4: Use trend...Ch. 12 - (Learning Objectives 4, 5: Calculate and analyze...Ch. 12 - Prob. 12.72DCCh. 12 - Prob. 12.73DCCh. 12 - Prob. 12.74EICCh. 12 - Focus on Financials Apple Inc. LO 1, 2, 3, 4, 5...Ch. 12 - Comprehensive Financial Statement Analysis Project...
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