Managerial Accounting (5th Edition)
5th Edition
ISBN: 9780134128528
Author: Karen W. Braun, Wendy M. Tietz
Publisher: PEARSON
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Textbook Question
Chapter 14, Problem 14.37AP
Ratio analysis over two years (Learning Objective 4)
Comparative financial statement data of Tennyson, Inc., follow:
14.4-91 Full Alternative Text
1. *Selected 2015 amounts
14.4-92 Full Alternative Text
- 1. Market price of Tennyson’s common stock: $43.51 at December 31,2017, and $31.36 at December 31, 2016
- 2. Common shares outstanding: 11,000,000 during 2017 and 11,000,000 during 2016
- 3. All sales are credit sales
Requirements
- 1. Compute the following ratios for 2017 and 2016:
- a.
Current ratio - b. Times-interest-earned ratio
- c. Inventory turnover
- d. Operating income percentage
- e. Return on common stockholders’ equity
- f. Earnings per share of common stock
- g. Price/earnings ratio
- 2. Decide (a) whether Tennyson’s ability to pay debts and to sell inventory improved or deteriorated during 2017 and (b) whether the investment attractiveness of its common stock appears to have increased or decreased.
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Additional information:
• Weighted-average ordinary shares in 2017 were $60,000
QUESTIONS
Based on the financial data above, do the following:
a. Calculate the financial ratio of VENUS TRADING COMPANY in 2017 below:
• Current ratio
• Account receivable turnover
• Inventory turnover
• Asset turnover
• Return on assets
• Return on ordinary shareholders equity
• Earnings per share
• Debts to total assets ratio
Provide an interpretation for each of the financial ratio calculations above.
b. Based on the calculation results in point a, provide an analysis of performance
finance VENUS TRADING COMPANY in 2017.
Calculating the WACC 2016 balance sheet.
Current assets. 2,000
Net fixed assets. -3,000
Total assets. -5,000
Accounts payable and accrual. 900
Short term debt. 100
Long term debt. 1,100
Preferred stock (10,000 shares). 250
Common stock (50,000 shares) 1,300
Retained earning 1,350
Total common equity. 2,650
Total liabilities and equity. 5,000
Sky earning per share last year were 3.20. The common stock sells for 55.00, last year dividend do was 2.10 and flotation cost of 10% would be required to sell new common stock. Security analysts are projecting that the common dividend will grow at an annual rate of 9% sky preferred stock pays a dividend of 3.30 per share and its preferred stock sells for 30.00 per share. The firm before tax cost of debt is 10% and its marginal tax rate is 35% the firm current outstanding 10% annual coupon rate is 6% and sky beta is 1.516. The firm total bent which is the sum of the company short-term debt and…
S15-7 Computing rate of return on total assets
Godhi's 2014 financial statements reported the following items-with 2013 figures
given for comparison:
Learning
GODHI, INC.
Balance Sheet
As of December 31, 2014 and 2013
2014
2013
$ 33,538
$ 29,562
Total Assets
17,100
14,962
Total Liabilities
Total Stockholders' Equity (all common)
16,438
14,600
$ 33,538
$ 29,562
Total Liabilities and Stockholders' Equity
Net income for 2014 was $3,890 and interest expense was $210. Compute Godhi's
rate of return on total assets for 2014. (Round to the nearest percent.)
Chapter 14 Solutions
Managerial Accounting (5th Edition)
Ch. 14 - (Learning Objective 1) Which of the following...Ch. 14 - Prob. 2QCCh. 14 - Prob. 3QCCh. 14 - Prob. 4QCCh. 14 - (Learning Objective 3) Which of the following is...Ch. 14 - (Learning Objective 4) Working capital is defined...Ch. 14 - Prob. 7QCCh. 14 - Prob. 8QCCh. 14 - Prob. 9QCCh. 14 - Prob. 10QC
Ch. 14 - Prob. 14.1SECh. 14 - Find trend percentages (Learning Objective 1)...Ch. 14 - Prob. 14.3SECh. 14 - Prepare common-size income statements (Learning...Ch. 14 - Analyze common-size income statements (Learning...Ch. 14 - Cartwrights Data Set used for S14-6 through...Ch. 14 - Cartwrights Data Set used for S14-6 through...Ch. 14 - Cartwrights Data Set used for S14-6 through...Ch. 14 - Prob. 14.9SECh. 14 - Prob. 14.10SECh. 14 - Prob. 14.11SECh. 14 - Prob. 14.12AECh. 14 - Prob. 14.13AECh. 14 - Prob. 14.14AECh. 14 - Prob. 14.15AECh. 14 - Prob. 14.16AECh. 14 - Calculate ratios (Learning Objective 4) Kelleher...Ch. 14 - Prob. 14.18AECh. 14 - Prob. 14.19AECh. 14 - Prob. 14.20AECh. 14 - Prob. 14.21AECh. 14 - Classify company sustainability measurements into...Ch. 14 - Prob. 14.23BECh. 14 - Prob. 14.24BECh. 14 - Prob. 14.25BECh. 14 - Prob. 14.26BECh. 14 - Prob. 14.27BECh. 14 - Calculate ratios (Learning Objective 4) Ponderosa...Ch. 14 - Prob. 14.29BECh. 14 - Prob. 14.30BECh. 14 - Prob. 14.31BECh. 14 - Calculate ratios (Learning Objective 4) Thornton...Ch. 14 - Prob. 14.33BECh. 14 - Prob. 14.34APCh. 14 - Comprehensive analysis (Learning Objectives 2, 3, ...Ch. 14 - Prob. 14.36APCh. 14 - Ratio analysis over two years (Learning Objective...Ch. 14 - Prob. 14.38APCh. 14 - Prob. 14.39BPCh. 14 - Prob. 14.40BPCh. 14 - Prob. 14.41BPCh. 14 - Ratio analysis over two years (Learning Objective...Ch. 14 - Make an investment decision (Learning Objective 4)...Ch. 14 - Prob. 14.44SCCh. 14 - Discussion Questions 1. Describe horizontal...Ch. 14 - Prob. 14.47ACTCh. 14 - Using financial statement ratios to analyze...
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