Intermediate Accounting: Reporting and Analysis
Intermediate Accounting: Reporting and Analysis
2nd Edition
ISBN: 9781285453828
Author: James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher: Cengage Learning
bartleby

Videos

Question
Book Icon
Chapter 4, Problem 18P

Requirement 1:

To determine

Determine the return on common equity ratio of Company H for 2013.

Requirement 1:

Expert Solution
Check Mark

Explanation of Solution

Determine the return on common equity ratio of Company H for 2013.

Step 1: Calculate the average total common stockholders’ equity.

Average total commonstockholders’ equity}={[Total common stockholders' equity, ending+Total common stockholders' equity, beginning+]2}={[$1,616.1million+$1,048.4million]2}=$2,664.52=$1,332.25 million

Step 2: Calculate the return on common equity ratio of C&C Incorporation for 2013.

Return on common equity = Net incomeAverage total common stocholders' equity=$820.5million$1,332.25 million=0.616

Hence, the return on common equity ratio of Company H for 2013 is 0.616.

Comment:

Return on common equity ratio indicates that Company H generated a 61.6% return for its common shareholders.

Requirement 2:

To determine

Determine the debt-to-assets ratio of Company H for 2013.

Requirement 2:

Expert Solution
Check Mark

Explanation of Solution

Determine the debt-to-assets ratio of Company H for 2013.

Debt-to-assets ratio = Total liabilitiesTotal assets=$3,741.4million$5,357.5million=0.698

Hence, the debt-to-assets ratio of Company H for 2013 is 0.698.

Comment:

Debt-to-assets ratio indicates that Company H’s 69.8% of total assets are financed by its creditors.

Requirement 3:

To determine

Determine the debt-to-equity ratio of Company H for 2013.

Requirement 3:

Expert Solution
Check Mark

Explanation of Solution

Determine the debt-to-equity ratio of Company H for 2013.

Debt-to-equity ratio = Total liabilitiesTotal common stocholders' equity=$3,741.4million$1,616.1million=2.32

Hence, the debt-to- equity ratio of Company H for 2013 is 2.32.

Comment:

Debt-to-assets ratio indicates that Company H has $2.32 in total liabilities for every of $1.00 in equity.

Requirement 4:

To determine

Determine the current ratio of Company H for 2013.

Requirement 4:

Expert Solution
Check Mark

Explanation of Solution

Determine the current ratio of Company H for 2013.

Current ratio = Current assetsCurrent liabilities=$2,487.3million$1,408.0 million=1.77

Hence, the current ratio of Company H for 2013 is 1.77.

Comment:

Current ratio indicates that Company H has $1.77 in current assets for every of $1.00 in current liabilities.

Requirement 5:

To determine

Determine the quick ratio of Company H for 2013.

Requirement 5:

Expert Solution
Check Mark

Explanation of Solution

Determine the quick ratio of Company H for 2013.

Quick ratio = Quick assetsCurrent liabilities=[Cash and cash equivalents +Recceivables]Current liabilities=[$1,118.5million+$477.9million]$1,408.0million=1.13

Hence, the quick ratio of Company H for 2013 is 1.13.

Comment:

Quick ratio indicates that Company H has $1.13 in quick assets (cash and receivables) for every of $1.00 in current liabilities.

Requirement 6:

To determine

Determine the inventory turnover in days of Company H for 2013.

Requirement 6:

Expert Solution
Check Mark

Explanation of Solution

Determine the inventory turnover in days of Company H for 2013.

Step 1: Calculate the average inventory.

Average inventory=(Ending inventory +Beinning inventory2)=($659.5million + $633.3million2)=($1,292.82)=$646.4 million

Step 2: Calculate the inventory turnover.

Inventory turnover= [Cost of goods soldAverage inventory]=$3,865.2million$646.4 million=5.979 times

Step 3: Calculate the inventory turnover in days of C&C Incorporation for 2013.

Inventory turnover days = 365 daysInventory turnover=3655.979 times=61days

Hence, the inventory turnover days of Company H for 2013 are 61 days.

Comment:

On an average Company H takes 61 days to convert inventory into sales in the operation cycle.

Requirement 7:

To determine

Determine the accounts receivable turnover in days of Company H for 2013.

Requirement 7:

Expert Solution
Check Mark

Explanation of Solution

Determine the accounts receivable turnover in days of Company H for 2013.

Step 1: Calculate the average accounts receivable.

Average accounts receivable =(Ending accounts receivable +Beinning accounts receivable2)=($477.9million +$461.4million2)=($939.32)=$469.65million

Step 2: Calculate the accounts receivable turnover.

Accounts receivable turnover= Total credit salesAverage accounts receivable=$7,146.1million$469.65 million=15.21 times

Step 3: Calculate the accounts receivable turnover in days of C&C Incorporation for 2013.

Accounts receivable turnover days = 365 daysAccounts receivable turnover=365 days15.21 times=24days

Hence, the accounts receivable turnover days of Company H for 2013 are 24 days.

Comment:

On an average Company H takes 24 days to collect its receivables from its customers.

Requirement 8:

To determine

Determine the accounts payable turnover in days of Company H for 2013.

Requirement 8:

Expert Solution
Check Mark

Explanation of Solution

Determine the accounts payable turnover in days of Company H for 2013.

Step 1: Determine the amount of inventory purchases.

Inventory purchases = Cost of goods sold + Change in inventory=Cost of goods sold +(Ending inventoryBeginning inventory)=$3,865.2million +($659.5million$633.3million)=$3,891.4million

Step 2: Calculate the average accounts payable.

Average accounts payable =(Ending accounts receivable +Beginning accounts receivable2)=($461.5million +$442.0million2)=$903.52=$451.75 million

Step 3: Calculate the accounts payable turnover.

Accounts payable turnover = [Inventory purchasesAverage accounts receivable]=[$3,891.4million$451.75 million]=8.61times

Step 4: Determine the accounts payable turnover in days.

Accounts payable turnover days = 365 daysAccounts payable turnover =365 days8.61 times=42days

Hence, the accounts payable turnover in days of Company H for 2013 is 42 days.

Comment:

On an average Company H takes 42 days to pay its payables to its suppliers.

Requirement 9:

To determine

Determine the operating cycle in days of Company H for 2013.

Requirement 9:

Expert Solution
Check Mark

Explanation of Solution

Determine the operating cycle in days of Company H for 2013.

Operating cycle(in days) =[Inventory turnover days+Accounts receivable turnover days Accounts payables turnover days]=61days +24days42days=43days

Hence, the operating cycle in days of Company H for 2013 is 43 days.

Comment:

Company H takes 43days to complete an operating cycle (the purchase of inventory and collection of cash from accounts receivable).

Requirement 10:

To determine

Determine the total assets turnover ratio of Company H for 2013.

Requirement 10:

Expert Solution
Check Mark

Explanation of Solution

Determine the total assets turnover ratio of Company H for 2013:

Step 1: Calculate average total assets.

Average total assets =[(Beginning total assets+Ending total assets)2]=[($5,357.5million+$4,754.8million)2]=($10,112.32)=$5,056.15 million

Step 2: Calculate the total assets turnover ratio of C&C Incorporation for 2013.

Total assets turnover ratio = Total revenuesAverage total assets=$7,146.1million$5,056.15 million=1.41

Hence, the total assets turnover ratio of Company H for 2013 is 1.41.

Comment:

Total assets turnover ratio indicates that Company H has generated $1.41 in sales for every of $1.00 in assets.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!
Students have asked these similar questions
Needam Company has analyzed its production process and identified two primary activities. These activities, their allocation bases, and their estimated costs are listed below. BEE (Click on the icon to view the estimated costs data.) The company manufactures two products: Regular and Super. The products use the following resources in March: BEE (Click on the icon to view the actual data for March.) Read the requirements. Requirement 5. Compute the predetermined overhead allocation rates using activity-based costing. Begin by selecting the formula to calculate the predetermined overhead (OH) allocation rate. Then enter the amounts to compute the all Actual overhead costs Actual qty of the allocation base used Estimated overhead costs Estimated qty of the allocation base Predetermined OH allocation rate Data table Data table Regular Super Number of purchase orders 10 purchase orders Number of parts 600 parts 13 purchase orders 800 parts Activity Purchasing Materials handling - X…
Makenna is a waiter at Albicious Foods in South Carolina. Makenna is single with one other dependent and receives the standard tipped hourly wage. During the week ending October 25, 2024, Makenna worked 44 hours and received $210 in tips. Calculate Makenna's gross pay, assuming tips are included in the overtime rate determination. Use Table 3-2. Required: 1. Complete the payroll register for Makenna. 2a. Does Albicious Foods need to contribute to Makenna’s wages to meet FLSA requirements? 2b. If so, how much should be contributed?
10. Record the journal entries for Holley Company for August. 11. Post appropriate entries to the Conversion Costs T-account to determine the amount of underallocated or overallocated overhead. Record the adjusting entry. 10. Record the journal entries for Holley Company for August. (Record debits first, then credits. Exclude explanations from journal entries) Journalize the purchase of raw materials. Date 5 a. Accounts Debit Credit Accounts Payable Accounts Receivable Conversion Costs Cost of Goods Sold Finished Goods Inventory Raw and In-Process Inventory Sales Revenue Wages Payable, Accumulated Depreciation, etc. More info a. Purchased raw materials on account, $30,000. b Incurred labor and overhead costs, $65,000. C d. Completed 900 units with standard costs of $75 for direct materials and $180 for conversion costs. Sold on account 600 units for $400 each. Print Done - X

Chapter 4 Solutions

Intermediate Accounting: Reporting and Analysis

Ch. 4 - Prob. 11GICh. 4 - Prob. 12GICh. 4 - Prob. 13GICh. 4 - Prob. 14GICh. 4 - Prob. 15GICh. 4 - Prob. 16GICh. 4 - Define (a) common stock, (b) additional paid-in...Ch. 4 - Prob. 18GICh. 4 - Prob. 19GICh. 4 - What are investments by owners? Distributions to...Ch. 4 - What accounting policies are disclosed in the...Ch. 4 - Give several examples of financial instruments and...Ch. 4 - Prob. 23GICh. 4 - Prob. 24GICh. 4 - Prob. 25GICh. 4 - Prob. 26GICh. 4 - Prob. 27GICh. 4 - Prob. 28GICh. 4 - Prob. 29GICh. 4 - Prob. 30GICh. 4 - Prob. 31GICh. 4 - Prob. 32GICh. 4 - Prob. 33GICh. 4 - Prob. 34GICh. 4 - A donated fixed asset (from a governmental unit)...Ch. 4 - Prob. 2MCCh. 4 - Prob. 3MCCh. 4 - Prob. 4MCCh. 4 - Prob. 5MCCh. 4 - Rent revenue collected 1 month in advance should...Ch. 4 - Prob. 7MCCh. 4 - Prob. 8MCCh. 4 - Which of the following should be disclosed in the...Ch. 4 - Prob. 10MCCh. 4 - Prob. 1RECh. 4 - Dorothy Corporation had the following accounts in...Ch. 4 - Dorothy Corporation had the following accounts in...Ch. 4 - Based on the information in RE4-2 and RE4-3,...Ch. 4 - Prob. 5RECh. 4 - Oz Corporation has the following assets at...Ch. 4 - Prob. 7RECh. 4 - Prob. 8RECh. 4 - Scarecrow Inc. issues 50,000 shares of 2 par value...Ch. 4 - Tinman Corporation reports the following balances...Ch. 4 - Prob. 1ECh. 4 - Plant and Equipment Your analysis of Moen...Ch. 4 - Prob. 3ECh. 4 - Prob. 4ECh. 4 - Classifications on Balance Sheet The balance sheet...Ch. 4 - Balance Sheet Baggett Companys balance sheet...Ch. 4 - Prob. 7ECh. 4 - Prob. 8ECh. 4 - Prob. 9ECh. 4 - Prob. 10ECh. 4 - Prob. 11ECh. 4 - Prob. 12ECh. 4 - Prob. 1PCh. 4 - Prob. 2PCh. 4 - Prob. 3PCh. 4 - Prob. 4PCh. 4 - Prob. 5PCh. 4 - Prob. 6PCh. 4 - Prob. 7PCh. 4 - Prob. 8PCh. 4 - Prob. 9PCh. 4 - Prob. 10PCh. 4 - Balance Sheet The following is an alphabetical...Ch. 4 - Prob. 12PCh. 4 - Prob. 13PCh. 4 - Comprehensive: Balance Sheet, Schedules, and Notes...Ch. 4 - Prob. 15PCh. 4 - Prob. 16PCh. 4 - Prob. 17PCh. 4 - Prob. 18PCh. 4 - Prob. 1CCh. 4 - Prob. 2CCh. 4 - Prob. 3CCh. 4 - Valuation of Assets and Stock A friend has come to...Ch. 4 - Prob. 5CCh. 4 - Prob. 6CCh. 4 - Analyzing Starbuckss Accounting Policies A company...Ch. 4 - Prob. 8CCh. 4 - Prob. 9C
Knowledge Booster
Background pattern image
Accounting
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
SEE MORE QUESTIONS
Recommended textbooks for you
Text book image
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:Cengage Learning
Text book image
Managerial Accounting: The Cornerstone of Busines...
Accounting
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Cengage Learning
How To Analyze an Income Statement; Author: Daniel Pronk;https://www.youtube.com/watch?v=uVHGgSXtQmE;License: Standard Youtube License