Compute the following: 1. Efficiency Ratio 2. Financial Leverage
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
A. Compute the following:
1. Efficiency Ratio
2. Financial Leverage
![ABC, INC.
Condensed Income Statement
For the Years Ended December 31
(In millions)
2014
2015
Net sales
8,853.3
6,954.7
Cost of goods sold
4,128.5
3,327.0
Gross Profit
4,724.0
3,627.7
Selling & Admin.
3,523.6
2,551.4
Nonrecurring charges
33.3
86.5
Income from operations
1,167.9
989.8
Interest Expense
351.5
137.5
Other income
(expense), net
(12.3)
15.4
Income before taxes
804.1
867.7
Income tax expense
322.1
280.0
Net income
P 482.0
P 587.7](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fee695d9c-aa54-4820-9347-e71f7798a41a%2F98e70139-a8fc-42e9-a964-fcb2f84ecdb7%2Fdluvh2k_processed.jpeg&w=3840&q=75)
Transcribed Image Text:ABC, INC.
Condensed Income Statement
For the Years Ended December 31
(In millions)
2014
2015
Net sales
8,853.3
6,954.7
Cost of goods sold
4,128.5
3,327.0
Gross Profit
4,724.0
3,627.7
Selling & Admin.
3,523.6
2,551.4
Nonrecurring charges
33.3
86.5
Income from operations
1,167.9
989.8
Interest Expense
351.5
137.5
Other income
(expense), net
(12.3)
15.4
Income before taxes
804.1
867.7
Income tax expense
322.1
280.0
Net income
P 482.0
P 587.7
![ABC, INC.
Condensed Balance Sheets
December 31
(In millions)
Assets
2014
2015
Current Assets
P
1,902.0
1,617.1
Plant Assets
2,952.8
2,526.9
Other Assets
5.513.8
742.0
Total Assets
10,368.6
4,886.0
Liabilities and Stockholders Equity
Current liabilities
2,017.6
2.482.3
Long-term liabilities
7,289.5
1,506.2
Total libailities
9,497.1
3,988.5
Stockholders' equity
Common stock
195.3
205.8
Retained earnings
1,013.3
1,065.7
Treasury stock
(337.1)
(374.0)
Total stockholders' equity
871.5
897.5
Total liabilities and stockholders' equity
P 10,368.6
P 4,886.0](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fee695d9c-aa54-4820-9347-e71f7798a41a%2F98e70139-a8fc-42e9-a964-fcb2f84ecdb7%2Flisd1br_processed.jpeg&w=3840&q=75)
Transcribed Image Text:ABC, INC.
Condensed Balance Sheets
December 31
(In millions)
Assets
2014
2015
Current Assets
P
1,902.0
1,617.1
Plant Assets
2,952.8
2,526.9
Other Assets
5.513.8
742.0
Total Assets
10,368.6
4,886.0
Liabilities and Stockholders Equity
Current liabilities
2,017.6
2.482.3
Long-term liabilities
7,289.5
1,506.2
Total libailities
9,497.1
3,988.5
Stockholders' equity
Common stock
195.3
205.8
Retained earnings
1,013.3
1,065.7
Treasury stock
(337.1)
(374.0)
Total stockholders' equity
871.5
897.5
Total liabilities and stockholders' equity
P 10,368.6
P 4,886.0
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