Suppose the years 2005 to 2009 were a period of rapid growth for a certain chain of coffeehouses and the company's revenues grew by more than 50% during that period. Use the hypothetical financial data for the company to answer the questions.Selected Financial Data (In millions, except earnings per share)As of and for the fiscal year endedSept. 27,2009(52 wks)Sept. 28,2008(52 wks)Sept. 30,2007(52 wks)Oct. 1,2006(52 wks)Oct. 2,2005(52 wks)Results of OperationsNet revenues: Company-operated retail$8,090.1$8,671.9$7,918.3$6,453.1$5,301.9 Specialty: Licensing1,222.31,171.61,026.3860.6673.0 Food service and other372.2439.5386.9343.2304.4 Total specialty1,594.51,611.11,413.21,203.8977.4Total net revenues$9,684.6$10,283.0$9,331.5$7,656.9$6,279.3Operating income$562.0$503.9$1,053.9$894.0$780.5Earnings before cumulative effect of change in accounting principle510.8415.5772.6691.5624.4Cumulative effect of accounting change for asset retirement obligations, net of taxes———17.2—Net earnings$510.8$415.5$772.6$674.3$624.4Earnings per common share before cumulative effect of change in accounting principle—diluted ("EPS")$0.52$0.43$0.87$0.73$0.61Cumulative effect of accounting change for asset retirement obligations, net of taxes—per common share———0.02—EPS—diluted$0.52$0.43$0.87$0.71$0.61Net cash provided by operating activities$1,389.0$1,258.7$1,331.2$1,131.6$922.9Capital expenditures (additions to property, plant and equipment)$445.6$984.5$1,080.3$771.2$643.3Balance SheetTotal assets$5,676.8$5,742.6$5,443.9$4,498.9$3,603.7Short-term borrowings—713.0710.3700.0277.0Long-term debt (including current portion)549.5550.3550.92.73.6Shareholders' equity$2,935.7$2,390.9$2,154.1$2,118.5$2,020.3(a)Calculate the asset turnover ratio for 2008 and 2009. (Round your answers to two decimal places.)2008 2009 (b)Calculate the net profit margin (as a %) for 2007, 2008, and 2009. (Round your answers to the nearest tenth of a percent.)2007 %2008 %2009 %(c)Calculate the return on investment (as a %) for 2007, 2008, and 2009. (Round your answers to the nearest tenth of a percent.)200728.56 %2008 %2009 %(d)Prepare a trend analysis of the net revenue and total assets for 2005 through 2009. (Round your answers to one decimal place.) 20092008200720062005Net Revenue 100.0Total Assets 100.0

Ratio analysis is a tool used by management and other stakeholders of the company to assess its…

Answered: Suppose the years 2005 to 2009 were a…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Suppose the years 2005 to 2009 were a period of rapid growth for a certain chain of coffeehouses and the company's revenues grew by more than 50% during that period. Use the hypothetical financial data for the company to answer the questions.

Selected Financial Data (In millions, except earnings per share)

As of and for the fiscal year ended	Sept. 27, 2009 (52 wks)	Sept. 28, 2008 (52 wks)	Sept. 30, 2007 (52 wks)	Oct. 1, 2006 (52 wks)	Oct. 2, 2005 (52 wks)
Results of Operations
Net revenues:
Company-operated retail	$8,090.1	$8,671.9	$7,918.3	$6,453.1	$5,301.9
Specialty:
Licensing	1,222.3	1,171.6	1,026.3	860.6	673.0
Food service and other	372.2	439.5	386.9	343.2	304.4
Total specialty	1,594.5	1,611.1	1,413.2	1,203.8	977.4
Total net revenues	$9,684.6	$10,283.0	$9,331.5	$7,656.9	$6,279.3
Operating income	$562.0	$503.9	$1,053.9	$894.0	$780.5
Earnings before cumulative effect of change in accounting principle	510.8	415.5	772.6	691.5	624.4
Cumulative effect of accounting change for asset retirement obligations, net of taxes	—	—	—	17.2	—
Net earnings	$510.8	$415.5	$772.6	$674.3	$624.4
Earnings per common share before cumulative effect of change in accounting principle—diluted ("EPS")	$0.52	$0.43	$0.87	$0.73	$0.61
Cumulative effect of accounting change for asset retirement obligations, net of taxes—per common share	—	—	—	0.02	—
EPS—diluted	$0.52	$0.43	$0.87	$0.71	$0.61
Net cash provided by operating activities	$1,389.0	$1,258.7	$1,331.2	$1,131.6	$922.9
Capital expenditures (additions to property, plant and equipment)	$445.6	$984.5	$1,080.3	$771.2	$643.3
Balance Sheet
Total assets	$5,676.8	$5,742.6	$5,443.9	$4,498.9	$3,603.7
Short-term borrowings	—	713.0	710.3	700.0	277.0
Long-term debt (including current portion)	549.5	550.3	550.9	2.7	3.6
Shareholders' equity	$2,935.7	$2,390.9	$2,154.1	$2,118.5	$2,020.3

(a)

Calculate the asset turnover ratio for 2008 and 2009. (Round your answers to two decimal places.)

2008 2009

(b)

Calculate the net profit margin (as a %) for 2007, 2008, and 2009. (Round your answers to the nearest tenth of a percent.)

2007 %2008 %2009 %

(c)

Calculate the return on investment (as a %) for 2007, 2008, and 2009. (Round your answers to the nearest tenth of a percent.)

200728.56 %2008 %2009 %

(d)

Prepare a trend analysis of the net revenue and total assets for 2005 through 2009. (Round your answers to one decimal place.)

	2009	2008	2007	2006	2005
Net Revenue					100.0
Total Assets					100.0

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