Intermediate Accounting
3rd Edition
ISBN: 9780136912644
Author: Elizabeth A. Gordon; Jana S. Raedy; Alexander J. Sannella
Publisher: Pearson Education (US)
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Textbook Question
Chapter 5, Problem 5.12E
Profitability Analyses. Use the following excerpt from Dragonfly Corporation’s balance sheet and its income statement to compute Dragonfly’s profit margin and return on assets for 2018 and 2019 Comment on Dragonfly's profitability and changes in profitability from 2018 to 2019. Dragonfly's total assets at the end of 2017 were $157,534 million.
| Assets (dollars in millions) | 2019 | 2018 |
| Current Assets | ||
| Cash and Cash Equivalents | $ 13,420 | $ 19.355 |
| Marketable Securities | 7,623 | 2.394 |
| 22,120 | 20,872 | |
| Inventories | 47,415 | 45,630 |
| Prepaid Expenses and Other Receivables | 1,312 | 1,264 |
| Total Current Assets | 91,890 | 89.515 |
| Property, Plant, and Equipment, Net | 67,045 | 65.762 |
| Other Assets | 3,773 | 3,770 |
| Total Assets | $162,708 | $159,047 |
| (in millions) | 2019 | 2018 |
| Sales | $ 63,762 | $ 61,890 |
| Cost of Goods Sold | 33,092 | 30,096 |
| Gross Profit | 30.670 | 31,794 |
| Selling. General, and Administrative Expenses | 15,335 | 15,897 |
| Research and Development Expense | 7,052 | 7,844 |
| Interest Expense | 145 | 142 |
| Earnings Before Taxes | 8,138 | 7,911 |
| Income Tax Expense | 2,848 | 2,769 |
| Net Income | $ 5,290 | $ 5,142 |
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Students have asked these similar questions
Ratio Analysis
Based on the Income Statement and Balance Sheet, complete the table below.
Then comment on the liquidity, profitability, leverage, asset management and market value.
Analysis of Financial Data (Table with ratios)
Ratio Analysis
2021
Est.
2020
2019
Industry Average
Liquidity Ratios
Current Ratio (times)
4.2
Quick Ratio (times)
2.1
Asset Management Ratios
Average sales/day
9
Inventory Turnover Ratio (times)
9
Days Sales Outstanding (days)
36
Fixed Assets Turnover Ratio (times)
3
Total Asset Turnover Ratio
1.8
Debt Management Ratios
Total Debt to Total Assets (%)
40
Times Interest Earned (times)
6
Debt to Equity Ratio (%)
1
Profitability Ratios…
DIRECTION: Compute the following
PROFITABILITY RATIOS
Gross Margin= Gross Profit/Net Sales
Net Profit Margin= Net Profit/ Net Sales
Return on Equity= Profit/Shareholder's Equity
Return on Asset= Profit/Total Asset
TREND ANALYSIS
Net Income Growth Rate
Total Assets Growth Rate
And also compute the percentage beside the columns
December 31,
December 31,
PERCENTAGE
2021
2020
USD
USD
Assets
Current assets
Cash and cash equivalents
34,115,412
25,681,845
Short-term financial instruments
71,417,748
80,798,680
Short-term financial assets at amortized cost
2,944,705
2,409,853
Short-term financial assets at fair value through profit or loss
35,624
62,452
Trade receivables
35,585,565
27,065,012
Non-trade receivables
3,930,828
3,150,548
Prepaid expenses
2,042,001
1,980,685
Inventories
36,172,043
28,007,314
Other current assets
4,441,629
3,281,589
Assets held-for-sale
-
812,370
Total Current Assets…
What are the firm's days' sales outstanding for 2018 and 2019?
Income Statements ($ in millions)
Balance Sheets ($ in millions)
2018
2019 Assets
2018
2019
$1,265 | Cash
$780 Short-Term investments
$92 | Accounts rec.
Sales Revenue
$1,180
$35
$20
$660
$20
$5
Less: Cost of goods sold
Less: Operating Expenses
Less: Depreciation
Earnings before interest and taxes
Less: Interest paid
$75
190
235
$50 Inventory
$343 Total Current Assets
$40
250
300
$405
$495
$560
$170
$150 | Net fixed assets
990
1,105
Taxable Income
$235
$193
Less: Taxes (40%)
$94
$77 Total assets
$1,485
1,665
Net income
$141
$116 Liabilities and Owner's Equity
Dividends (45%)
Additions to Retained Earnings
$63
$52
2018
2019
$78
$64 Accounts payable
$125
$100
Accruals
$10
$10
Notes payable
35
40
Total Current Liabilities
$170
$150
Long-term debt
598
790
Total Liabilities
$768
$940
Common stock
554
498
Retained earnings
Total Equity
Total liab.& equity
163
$227
717
$725
$1,485
$1,665
Chapter 5 Solutions
Intermediate Accounting
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