Financial Accounting Intro Concepts Meth/Uses
14th Edition
ISBN: 9781285595047
Author: Weil
Publisher: Cengage
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Need help this question general accounting

Transcribed Image Text:Sepracor, Inc., a U.S. drug company, reported the following information. The company
prepares its financial statements in accordance with U.S. GAAP.
Current Liabilities
2007 (,000)
$554,114
Convertible Subordinated Debt 648,020
Total Liabilities
Stockholders' Equity
1,228,313
176,413
Net Income
58,333
Analysts attempting to compare Sepracor to international drug companies may face a
challenge due to differences in accounting for convertible debt under iGAAP. Under IAS
32, Financial Instruments, convertible bonds, at issuance, must be classified separately
into their debt and equity components based on estimated fair value.
Compute the following ratios for Sepracor, Inc. (assume that year-end balances
approximate annual averages.)
(1) Return on assets.
(2) Return on stockholders' equity
(3) Debt to asset ratio
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