Calculate the following financial ratios for Phone Corporation: (Use 365 daysin a year. Do not round intermediate calculations. Round your finalanswers to 2 decimal places.)1. Return on Assets (use average balance sheet figures)2. Return on capital (use average balance sheet figures) %3. Days in inventory (use start of year balance sheet figures) %4. Inventory turnover (use start of year balance sheet figures5. Average collection period (use start of year balance sheet figures)6. Operating profit margin %7. Long term debt ratio (use end of year balance sheet figures)8. Total Debt ratio (use end of year balance sheet figures) Here are simplified financial statements for Phone Corporation in a recentyear:INCOME STATEMENT(Figures in $ millions)$12,5003,710Net salesCost of goods soldOther expenses4,112Depreciation2,308Earnings before interest and taxes2,370(EBIT)Interest expense650Income before tax1,720Taxes (at 30%)516$ 1,2042$Net incomeDividends806BALANCE SHEET(Figures in $ millions)End ofStart ofYearYearAssetsCash and marketable securities82151Receivables2,0322,350Inventories152203Other current assets8328973,09819,9033,60119,8453,700Total current assetsNet property, plant, and equipmentOther long-term assets4,146Total assets27,14727,146Liabilities and shareholders' equityPayables2,4941,2,970Short-term debt3841,538Other current liabilities7767524,6548,7616,1087,6245,2608,086Total current liabilitiesLong-term debt and leasesOther long-term liabilitiesShareholders' equity6,0797,721Total liabilities and shareholders'$ 27,14727,146equity%24%24%24%24%24

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Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter15: Financial Statement Analysis

Section: Chapter Questions

Problem 19BEA

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Question

Calculate the following financial ratios for Phone Corporation: (Use 365 days
in a year. Do not round intermediate calculations. Round your final
answers to 2 decimal places.)
1. Return on Assets (use average balance sheet figures)
2. Return on capital (use average balance sheet figures) %
3. Days in inventory (use start of year balance sheet figures) %
4. Inventory turnover (use start of year balance sheet figures
5. Average collection period (use start of year balance sheet figures)
6. Operating profit margin %
7. Long term debt ratio (use end of year balance sheet figures)
8. Total Debt ratio (use end of year balance sheet figures)

Here are simplified financial statements for Phone Corporation in a recent
year:
INCOME STATEMENT
(Figures in $ millions)
$12,500
3,710
Net sales
Cost of goods sold
Other expenses
4,112
Depreciation
2,308
Earnings before interest and taxes
2,370
(EBIT)
Interest expense
650
Income before tax
1,720
Taxes (at 30%)
516
$ 1,204
2$
Net income
Dividends
806
BALANCE SHEET
(Figures in $ millions)
End of
Start of
Year
Year
Assets
Cash and marketable securities
82
151
Receivables
2,032
2,350
Inventories
152
203
Other current assets
832
897
3,098
19,903
3,601
19,845
3,700
Total current assets
Net property, plant, and equipment
Other long-term assets
4,146
Total assets
27,147
27,146
Liabilities and shareholders' equity
Payables
2,494
1,
2,970
Short-term debt
384
1,
538
Other current liabilities
776
752
4,654
8,761
6,108
7,624
5,260
8,086
Total current liabilities
Long-term debt and leases
Other long-term liabilities
Shareholders' equity
6,079
7,721
Total liabilities and shareholders'
$ 27,147
27,146
equity
%24
%24
%24
%24
%24

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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