Financial Accounting
5th Edition
ISBN: 9781618531650
Author: Thomas Dyckman
Publisher: Cambridge Business Publishers
expand_more
expand_more
format_list_bulleted
Question
Chapter 1, Problem 46CP
a.
To determine
Prepare income statements of Company S for the years ended September 29, 2013 and September 30, 2012.
b.
To determine
Compute the return on equity ratio of company S for the year 2013 and 2012.
c.
To determine
Ascertain the debt-to-equity ratio for the year 2013 and 2012.
d.
To determine
Indicate the effect of one-time litigation charge on the company’s return on equity ratio.
e.
To determine
Discuss the costs and benefits of disclosing the information about the pending litigation in its 2012 annual report.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
For fiscal year 2018, Walmart Inc. (WMT) had total revenues of $500.34 billion, net income of $9.86 billion, total
assets of $204.52 billion, and total shareholders' equity of $77.87 billion.
a. Calculate Walmart's ROE directly, and using the DuPont Identity.
b. Comparing with the data for Costco, use the DuPont Identity to understand the difference between the
two firms' ROES.
Data table
For fiscal year 2018, Costco Wholesale Corporation (COST) had a net profit margin of 2.08%, asset
turnover of 3.55, and a book equity multiplier of 3.37. Costco's ROE (DuPont) is 24.88%.
The condensed financial statements of John Cully Company, for the years ended June 30, 2017 and 2016, are presented below.
Compute the following ratios for 2017 and 2016.
Return on assets. (Assets on 6/30/15 were $3,349.9.)
Return on common stockholders’ equity. (Stockholders’ equity on 6/30/15 was $1,795.9.)
Debt to assets ratio.
Times interest earned.
The financial statements for Tyler Toys, Inc. are shown in the popup window:
LOADING...
.
Calculate the debt ratio, times interest earned ratio, and cash coverage ratio for 2013 and 2014 for Tyler Toys. Should any of these ratios or the change in a ratio warrant concern for the managers of Tyler Toys or the shareholders?
Tyler Toys, Inc.
Income Statement for Years Ending December 31, 2013 and 2014
2014
2013
Revenue
$14,146,575
$13,566,748
Cost of goods sold
$-8,448,000
$-8,132,335
Selling, general, andadministrative expenses
$-998,406
$-980,458
Depreciation
$-1,497,529
$-1,471,013
EBIT
$3,202,640
$2,982,942
Interest expense
$-376,217
$-354,594
Taxes
$-1,074,041
$-998,772
Net income
$1,752,382
$1,629,576
Right-click on the table and select Copy to Clipboard and then right-click the
highlighted texts in the popup dialogue box and select Copy in order to paste its…
Chapter 1 Solutions
Financial Accounting
Ch. 1 - Prob. 1MCCh. 1 - Prob. 2MCCh. 1 - Prob. 3MCCh. 1 - Prob. 4MCCh. 1 - Prob. 5MCCh. 1 - Prob. 1QCh. 1 - Prob. 2QCh. 1 - Prob. 3QCh. 1 - Prob. 4QCh. 1 - Prob. 5Q
Ch. 1 - Prob. 6QCh. 1 - Prob. 7QCh. 1 - Prob. 8QCh. 1 - Prob. 9QCh. 1 - Prob. 10QCh. 1 - Prob. 11QCh. 1 - Prob. 12QCh. 1 - Prob. 13QCh. 1 - Prob. 14QCh. 1 - Prob. 15QCh. 1 - Prob. 16QCh. 1 - Prob. 17QCh. 1 - Prob. 18QCh. 1 - Prob. 19MECh. 1 - Prob. 20MECh. 1 - Prob. 21MECh. 1 - Prob. 22MECh. 1 - Prob. 24MECh. 1 - Prob. 25MECh. 1 - Prob. 26MECh. 1 - Prob. 27ECh. 1 - Prob. 28ECh. 1 - Prob. 29ECh. 1 - Prob. 30ECh. 1 - Prob. 31ECh. 1 - Prob. 32ECh. 1 - Prob. 33ECh. 1 - Prob. 34ECh. 1 - Prob. 35ECh. 1 - Prob. 36PCh. 1 - Prob. 37PCh. 1 - Prob. 38PCh. 1 - Prob. 39PCh. 1 - Prob. 40PCh. 1 - Prob. 41PCh. 1 - Prob. 42PCh. 1 - Prob. 43PCh. 1 - Prob. 44PCh. 1 - Prob. 45PCh. 1 - Prob. 46CPCh. 1 - Prob. 47CPCh. 1 - Prob. 48CPCh. 1 - Prob. 49CPCh. 1 - Prob. 50CP
Knowledge Booster
Similar questions
- Juroe Company provided the following income statement for last year: Juroes balance sheet as of December 31 last year showed total liabilities of 10,250,000, total equity of 6,150,000, and total assets of 16,400,000. Required: Note: Round answers to two decimal places. 1. Calculate the times-interest-earned ratio. 2. Calculate the debt ratio. 3. Calculate the debt-to-equity ratio.arrow_forwardFinancial Statement Analysis The financial statements for Nike, Inc., are presented in Appendix C at the end of the text. The following additional information (in thousands) is available: Instructions 1. Determine the following measures for the fiscal years ended May 31, 2013 (fiscal 2012), and May 31, 2012 (fiscal 2011), rounding to one decimal place. a. Working capital b. Current ratio c. Quick ratio d. Accounts receivable turnover e. Number of days sales in receivables f. Inventory turnover g. Number of days sales in inventory h. Ratio of liabilities to stockholders equity i. Ratio of sales to assets j. Rate earned on total assets, assuming interest expense is 23 million for the year ending May 31, 2013, and 31 million for the year ending May 31, 2012 k. Rate earned on common stockholders equity l. Price-earnings ratio, assuming that the market price was 61.66 per share on May 31, 2013, and 53.10 per share on May 31, 2012 m. Percentage relationship of net income to sales 2. What conclusions can be drawn from these analyses?arrow_forwardThe below tables shows Dynamic Mattress’s year-end 2016 and 2018 balance sheets, and its income statement for 2017. Dynamic MattressYear-End Balance Sheet for 2016(figures in $ millions) Assets Liabilities and Shareholders’ Equity Current Assets: Current Liabilities: Cash $ 22 Bank loans $ 22 Marketable securities 11 Accounts payable 80 Accounts receivable 111 Inventory 155 Total current assets $ 299 Total current liabilities $ 102 Fixed assets: Gross investment $ 251 Long-term debt 26 Less depreciation 71 Net worth (equity and retained earnings) 351 Net fixed assets $ 180 Total assets $ 479 Total liabilities and net worth $ 479 Dynamic MattressYear-End Balance Sheet for 2017(figures in $ millions) Assets Liabilities and Shareholders’ Equity Current Assets: Current Liabilities: Cash $ 32.0 Debt due within a year (bank…arrow_forward
- FINANCIAL RATIOS Required: a. Compute for the company's profitability and operating efficiency ratios in 2014. b. Compute for the financial health ratios of the company in 2014 and 2013. Very Berry Company Very Berry Company Statement of Comprehensive Income Statement of financial Position For the year ended December 31 For the year ended December 31 2014 2013 400,000 5,600,000 2014 2013 Cash 180,000 Short-term Investments 1,800,000 Sales 10,040,000 8,760,000 Accounts Receivable 1,480,000 1,060,000 Cost of Goods Sold 5,680,000 5,860,000 Inventory 1,380,000 1,640,000 4,360,000 1,160,000 Gross Profit 2,800,000 8,860,000 10,860,000 Other Current Assets 4,680,000 Operating Expenses Operating Income Interest Expense 1,680,000 Total Current Assets 5,040,000 1,20,000 28,000 3,200,000 Equipment 6,800,000 5,200,000 100,000 Total Assets 17,660,000 10,240,000 3,100,000 Accounts Payable Notes Payable - long term Owner, Capital Total Liabilities and Capital 2,620,000 2,120,000 Net Income 1,192,000…arrow_forwardWin's Companies, a home improvement store chain, reported the following summanzed figures E (Click the icon to view the income statement.) E (Click the icon to view the balance sheets.) Win's has 20,000 common shares outstanding during 2018. Read the requirements Requirement 1. Compute Win's Companies' current ratio at May 31, 2018 and 2017 Begin by selecting the formula to calculate Win's Companies' current ratio. Then enter the amounts and calcu ale the current ratio for 2018 and then 2017. (Round your answers to two decimal places, X.XX.) Current ratio (i Balance Sheets Income Statement Win's Companies Win's Companies Balance Sheet Income Statement May 31, 2018 and 2017 Years Ended May 31, 2018 and 2017 Assets Liabilities 2018 2017 2018 2017 2018 2017 Net Sales Revenue 24 57 200 $ 39,800 Cash $. 2.300 $ 1300 Total Current Liabilities 22,000 $ 12,900 Cost of Goods Sold 22.500 25,500 12,200 11,300 Short-term Invesiments 29 000 13.000 Long-term Liabilities Interest Expense 500 320…arrow_forwardThe comparative statements of Dubai Company are presented below. All sales were on account. The allowance for doubtful accounts was $3,200 on December 31, 2017, and $3,000 on December 31, 2020. Required: 1- Compute the following ratios for 2021. (Weighted average common shares in 2021 were 62,500.) Earnings per share. Return on common stockholders’ equity. Return on assets. Current. Acid-test. Accounts receivable turnover. Inventory turnover. Times interest earned. Asset turnover. Debt to assets. 2. Based on the ratios calculated, discuss briefly the improvement or lack thereof in financial position and operating results from 2020 to 2021 of Dubai Company.arrow_forward
- The financial statements for Tyler Toys, Inc. are shown in the popup window: LOADING... . Calculate the current ratio, quick ratio, and cash ratio for Tyler Toys for 2013 and 2014. Should any of these ratios or the change in a ratio warrant concern for the managers of Tyler Toys or the shareholders? Tyler Toys, Inc. Income Statement for Years Ending December 31, 2013 and 2014 2014 2013 Revenue $14,146,091 $13,567,817 Cost of goods sold $-8,447,104 $-8,131,461 Selling, general, andadministrative expenses $-998,668 $-981,881 Depreciation $-1,498,161 $-1,471,091 EBIT $3,202,158 $2,983,384 Interest expense $-375,459 $-354,144 Taxes $-1,074,146 $-999,111 Net income $1,752,553 $1,630,129 Right-click on the table and select Copy to Clipboard and then right-click the highlighted texts in the popup dialogue box and select Copy in order to paste its contents…arrow_forwardThe financial statements for Tyler Toys, Inc. are shown in the popup window: LOADING... . Calculate the profit margin, return on assets, and return on equity for 2013 and 2014 for Tyler Toys. Should any of these ratios or the change in a ratio warrant concern for the managers of Tyler Toys or the shareholders? Tyler Toys, Inc. Income Statement for Years Ending December 31, 2013 and 2014 2014 2013 Revenue $14,146,094 $13,567,551 Cost of goods sold $-8,448,688 $-8,131,338 Selling, general, and administrative expenses $-998,878 $-980,620 Depreciation $-1,497,580 $-1,472,740 EBIT $3,200,948 $2,982,853 Interest expense $-376,634 $-354,060 Taxes $-1,073,239 $-998,941 Net income $1,751,075 $1,629,852 Right-click on the table and select Copy to Clipboard and then right-click the highlighted texts in the popup dialogue box and select Copy in order to paste its…arrow_forwardThe below tables shows Dynamic Mattress’s year-end 2016 and 2018 balance sheets, and its income statement for 2017. Dynamic MattressYear-End Balance Sheet for 2016(figures in $ millions) Assets Liabilities and Shareholders’ Equity Current Assets: Current Liabilities: Cash $ 46 Bank loans $ 46 Marketable securities 23 Accounts payable 140 Accounts receivable 123 Inventory 215 Total current assets $ 407 Total current liabilities $ 186 Fixed assets: Gross investment $ 263 Long-term debt 38 Less depreciation 83 Net worth (equity and retained earnings) 363 Net fixed assets $ 180 Total assets $ 587 Total liabilities and net worth $ 587 Dynamic MattressYear-End Balance Sheet for 2017(figures in $ millions) Assets Liabilities and Shareholders’ Equity Current Assets: Current Liabilities: Cash $ 176.0 Debt due within a year (bank…arrow_forward
- You are provided with the Income Statement and the Balance Sheet of HTS software, Inc. for 2011. Required: (b) Analyze the current financial position for the company from a time series and cross section viewpoint. (c) Break your analysis into an evaluation of the firm’s liquidity, activity, debt, profitability and market ratios. Historical and Industry Average Ratios HTS Software , Inc. Ratio 2010 2011 Industry2011 Current Ratio 2.6 — 2.7 Quick Ratio 1.8 — 1.75 Inventory Turnover 4.5 — 4.7 Average Collection Period 40days — 42 days Total Asset Turnover 1.2 — 1 Debt Ratio 20% — 21% Times Interest Earned 9 — 8.9 Gross Profit Margin 43% — 44% Operating Profit Margin 30% — 32% Net Profit Margin 20% — 21% Return on total assets 12% — 13% Return on Equity Price/Earnings Ratio 15% 7.3 — — 16% 8 Balance SheetHTS Software, Inc.December 31,…arrow_forwardYou are provided with the Income Statement and the Balance Sheet of HTS software, Inc. for 2011. Required: (b) Analyze the current financial position for the company from a time series and cross section viewpoint. (c) Break your analysis into an evaluation of the firm’s liquidity, activity, debt, profitability and market ratios. Historical and Industry Average Ratios HTS Software , Inc. Ratio 2010 2011 Industry2011 Current Ratio 2.6 2.08 2.7 Quick Ratio 1.8 1.32 1.75 Inventory Turnover 4.5 6 4.7 Average Collection Period 40days 9.125 42 days Total Asset Turnover 1.2 1.69 1 Debt Ratio 20% 28.2% 21% Times Interest Earned 9 5.9% 8.9 Gross Profit Margin 43% 42.8% 44% Operating Profit Margin 30% 25.5% 32% Net Profit Margin 20% 17% 21% Return on total assets 12% 4.11% 13% Return on Equity Price/Earnings Ratio 15% 7.3 19% 4.4 16% 8…arrow_forwardCompute each of the following ratios for Jarir, Inc. and Extra Inc. as of January 31, 2009, using the amounts originally reported in their balance sheets for the year.(1) Liabilities to Assets Ratio = Total Liabilities/Total Assets(2) Long-Term Debt to Long-Term Capital Ratio = Long-Term Debt/(Long-Term Debt +Shareholders’ Equity)arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Financial Accounting: The Impact on Decision Make...AccountingISBN:9781305654174Author:Gary A. Porter, Curtis L. NortonPublisher:Cengage Learning
Managerial Accounting: The Cornerstone of Busines...AccountingISBN:9781337115773Author:Maryanne M. Mowen, Don R. Hansen, Dan L. HeitgerPublisher:Cengage Learning
Financial AccountingAccountingISBN:9781305088436Author:Carl Warren, Jim Reeve, Jonathan DuchacPublisher:Cengage Learning
Financial Accounting: The Impact on Decision Make...
Accounting
ISBN:9781305654174
Author:Gary A. Porter, Curtis L. Norton
Publisher:Cengage Learning
Managerial Accounting: The Cornerstone of Busines...
Accounting
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Cengage Learning
Financial Accounting
Accounting
ISBN:9781305088436
Author:Carl Warren, Jim Reeve, Jonathan Duchac
Publisher:Cengage Learning