Corporate Financial Accounting
15th Edition
ISBN: 9781337398169
Author: Carl Warren, Jeff Jones
Publisher: Cengage Learning
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Chapter 5, Problem 5.6MAD
a.
To determine
Financial Ratios: Financial ratios are the metrics used to evaluate the liquidity, capabilities, profitability, and overall performance of a company.
To Calculate: The asset turnover ratio of Company K.
b.
To determine
To Explain: The reason that why Company T’s asset turnover ratio is lower than Company K’s.
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Students have asked these similar questions
Kroger Co., a national supermarket chain, reported the following data (in millions) in its
financial statements for a recent year:
Total revenue
$108,465
Total assets at end of year
30,556
Total assets at beginning of year
29,281
a. Compute the asset turnover. Round to two decimal places.
b.
Tiffany & Co. is a large North American retailer of jewelry with an asset
turnover of 0.86. Why would Tiffany's asset turnover be lower than that of Kroger?
Selected financial data of Target Corporation and Wal-Mart Stores, Inc. for a recent year are presented here (in millions).
Target Corporation Wal-Mart Stores, Inc.
Income Statement Data for Year
Net sales $61,471 $374,526
Cost of goods sold 41,895 286,515
Selling and administrative expenses 16,200 70,847
Interest expense 647 1,798
Other income (expense) 1,896 4,273
Income tax expense 1,776 6,908
Net income $2,849 $12,731
Balance Sheet Data (End of Year)
Current assets $18,906 $47,585
Noncurrent assets 25,654 115,929
Total assets $44,560 $163,514
Current liabilities $11,782 $58,454
Long-term debt 17,471 40,452
Total stockholders' equity 15,307 64,608
Total liabilities and stockholders' equity $44,560 $163,514
Target Corporation Wal-Mart Stores, Inc.
Beginning-of-Year Balances
Total assets $37,349 $151,587
Total stockholders' equity 15,633 61,573
Current liabilities 11,117 52,148
Total liabilities 21,716 90,014
Other Data
Average net accounts receivable $7,124 $3,247
Average inventory…
Nordstrom, Inc. operates department stores in numerous states. Suppose selected financial statement data (in millions of dollars) for a recent year follow.
End of Year
Beginning of Year
Cash and cash equivalents
$ 72
$ 358
Receivables (net)
1,942
1,788
Merchandise inventory
900
956
Other current assets
303
259
Total current assets
$3,217
$3,361
Total current liabilities
$1,601
$1,635
Compute working capital and the current ratio at the beginning of the year and at the end of the year. (Round current ratio to 2 decimal places, e.g. 15.25.)
Beginning of Year
End of Year
Working capital
$
enter a dollar amount
$
enter a dollar amount
Current ratio
enter current ratio rounded to 2 decimal places
:1
enter current ratio rounded to 2 decimal places
:1
Chapter 5 Solutions
Corporate Financial Accounting
Ch. 5 - Prob. 1DQCh. 5 - Prob. 2DQCh. 5 - The credit period during which the buyer of...Ch. 5 - What is the meaning of (A) 1/15, n/60; (B) n/30;...Ch. 5 - Prob. 5DQCh. 5 - Prob. 6DQCh. 5 - Who is responsible for freight when the terms of...Ch. 5 - Name three accounts that would normally appear in...Ch. 5 - Audio Outfitter Inc., which uses a perpetual...Ch. 5 - Assume that Audio Outfitter Inc. in Discussion...
Ch. 5 - Gross profit During the current year, merchandise...Ch. 5 - Purchases transactions Elkhorn Company purchased...Ch. 5 - Prob. 5.3BECh. 5 - Prob. 5.4BECh. 5 - Transactions for buyer and seller Shore Co. sold...Ch. 5 - Adjusting entries Halm Flooring Company uses a...Ch. 5 - Asset turnover ratio Financial statement data for...Ch. 5 - Determining gross profit During the current year,...Ch. 5 - Determining cost of goods sold For a recent year,...Ch. 5 - Chart of accounts Monet Paints Co. is a newly...Ch. 5 - Purchase-related transactions The Stationery...Ch. 5 - Purchase-related transactions A retailer is...Ch. 5 - Purchase-related transactions The debits and...Ch. 5 - Purchase-related transactions Stylon Co., a...Ch. 5 - Prob. 5.8EXCh. 5 - Sales-related transactions, including the use of...Ch. 5 - Customer refund Senger Company sold merchandise of...Ch. 5 - Customer return and refund On December 28, 20Y3,...Ch. 5 - Sales-related transactions After the amount due on...Ch. 5 - Sales-related transactions The debits and credits...Ch. 5 - Prob. 5.14EXCh. 5 - Determining amounts to be paid on invoices...Ch. 5 - Prob. 5.16EXCh. 5 - Purchase-related transactions Based on the data...Ch. 5 - Prob. 5.18EXCh. 5 - Prob. 5.19EXCh. 5 - Normal balances of merchandise accounts What is...Ch. 5 - Income statement and accounts for merchandiser For...Ch. 5 - Adjusting entry for inventory shrinkage Omega Tire...Ch. 5 - Adjusting entry for customer refunds, allowances,...Ch. 5 - Adjusting entry for customer refunds, allowances,...Ch. 5 - Income statement for merchandiser The following...Ch. 5 - Determining amounts for items omitted from income...Ch. 5 - Multiple-step income statement On March 31, 20Y9,...Ch. 5 - Multiple-step income statement The following...Ch. 5 - Single-step income statement Summary operating...Ch. 5 - Closing the accounts of a merchandiser From the...Ch. 5 - Closing entries; net income Based on the data...Ch. 5 - Closing entries On July 31, the close of the...Ch. 5 - Prob. 5.33EXCh. 5 - Prob. 5.34EXCh. 5 - Prob. 5.35EXCh. 5 - Discount taken in next fiscal year Using the data...Ch. 5 - Prob. 5.37EXCh. 5 - Rules of debit and credit for periodic inventory...Ch. 5 - Journal entries using the periodic inventory...Ch. 5 - Identify items missing in determining cost of...Ch. 5 - Appendix Cost of goods sold and related items The...Ch. 5 - Cost of goods sold Based on the following data,...Ch. 5 - Cost of goods sold Based on the following data,...Ch. 5 - Appendix 2 Cost of goods sold Identify the errors...Ch. 5 - Closing entries using periodic inventory system...Ch. 5 - Purchase-related transactions using perpetual...Ch. 5 - Sales-related transactions using perpetual...Ch. 5 - Sales-related and purchase-related transactions...Ch. 5 - Sales-related and purchase-related transactions...Ch. 5 - Multiple-step income statement and balance sheet...Ch. 5 - Single-step income statement and balance sheet...Ch. 5 - Purchase-related transactions using periodic...Ch. 5 - Appendix Sales-related and purchase-related...Ch. 5 - Prob. 5.9APRCh. 5 - Periodic inventory accounts, multiple-step income...Ch. 5 - Purchase-related transactions using perpetual...Ch. 5 - Sales-related transactions using perpetual...Ch. 5 - Sales-related and purchase-related transactions...Ch. 5 - Sales-related and purchase-related transactions...Ch. 5 - Multiple-step income statement and balance sheet...Ch. 5 - Single-step income statement and balance sheet...Ch. 5 - Prob. 5.7BPRCh. 5 - Prob. 5.8BPRCh. 5 - Prob. 5.9BPRCh. 5 - Periodic inventory accounts, multiple-step income...Ch. 5 - Comprehensive Problem 2 8. Net income: 741,455...Ch. 5 - Analyze and compare Amazon.com and Netflix...Ch. 5 - Analyze Dollar General Dollar General Corporation...Ch. 5 - Compare Dollar Tree and Dollar General The asset...Ch. 5 - Prob. 5.4MADCh. 5 - Analyze Home Depot The Home Depot (HD) reported...Ch. 5 - Prob. 5.6MADCh. 5 - Analyze J. C. Penney J. C. Penney Company, Inc....Ch. 5 - Prob. 5.1TIFCh. 5 - Prob. 5.2TIFCh. 5 - Prob. 5.5TIFCh. 5 - Prob. 5.6TIFCh. 5 - Prob. 5.7TIF
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