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Cyberdyne Systems and Virtucon are competitors focusing on the latest technologles. Selected financial data is provided below. (Round your answers to 1 decimal place. Enter your answers In mllons (1.e., $10,100,000 should be entered as 10.1).) (S in millions) Net sales Virtucon Cyberdyne $41,905 10,476 15,165 60,905 62,905 $ 6,384 1,341 1,500 15,884 18,000 Net income Operating cash flows Total assets, beginning Total assets, ending Requlred: 1. Calculate the return on assets for both companles. ($ in millions) Return on Assets Return on Assets Cyberdyne Virtucon 2. Calculate the cash return on assets for both companles. ($ in millions) Cash Return on Assets Cash Return on Assets Cyberdyne Virtucon

Cyberdyne Systems and Virtucon are competitors focusing on the latest technologles. Selected financial data is provided below. (Round your answers to 1 decimal place. Enter your answers In mllons (1.e., $10,100,000 should be entered as 10.1).) (S in millions) Net sales Virtucon Cyberdyne $41,905 10,476 15,165 60,905 62,905 $ 6,384 1,341 1,500 15,884 18,000 Net income Operating cash flows Total assets, beginning Total assets, ending Requlred: 1. Calculate the return on assets for both companles. ($ in millions) Return on Assets Return on Assets Cyberdyne Virtucon 2. Calculate the cash return on assets for both companles. ($ in millions) Cash Return on Assets Cash Return on Assets Cyberdyne Virtucon

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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### Financial Analysis of Cyberdyne Systems and Virtucon Cyberdyne Systems and Virtucon are competitors focusing on the latest technologies. Selected financial data is provided below. (Round your answers to 1 decimal place. Enter your answers in millions (i.e., $10,100,000 should be entered as 10.1)): | ($ in millions) | Cyberdyne | Virtucon | |--------------------------|-----------|----------| | Net sales | $41,905 | $6,384 | | Net income | 10,476 | 1,341 | | Operating cash flows | 15,165 | 1,500 | | Total assets, beginning | 60,905 | 15,884 | | Total assets, ending | 62,905 | 18,000 | **Required:** ### 1. Calculate the return on assets for both companies. Here is a table for the calculation of Return on Assets (ROA): Return on Assets is calculated using the formula: \[ \text{Return on Assets} = \frac{\text{Net Income}}{\text{Average Total Assets}} \] Average Total Assets is calculated as: \[ \text{Average Total Assets} = \frac{\text{Beginning Total Assets} + \text{Ending Total Assets}}{2} \] **Step-by-Step Calculation:** * For Cyberdyne: Average Total Assets = \(\frac{60,905 + 62,905}{2} = 61,905\) Return on Assets = \(\frac{10,476}{61,905}\) * For Virtucon: Average Total Assets = \(\frac{15,884 + 18,000}{2} = 16,942\) Return on Assets = \(\frac{1,341}{16,942}\) | ($ in millions) | | | | Return on Assets | |-----------------|------|---------------------------------------|----------------|------------------| | Cyberdyne | / | \((\frac{\text{Net Income}}{\text{Average Total Assets}})\) | = | | Virtucon | / | \((\frac{\text{Net Income}}{\text{Average Total Assets}})\) | = | ### 2. Calculate the cash return on
Transcribed Image Text:### Financial Analysis of Cyberdyne Systems and Virtucon Cyberdyne Systems and Virtucon are competitors focusing on the latest technologies. Selected financial data is provided below. (Round your answers to 1 decimal place. Enter your answers in millions (i.e., $10,100,000 should be entered as 10.1)): | ($ in millions) | Cyberdyne | Virtucon | |--------------------------|-----------|----------| | Net sales | $41,905 | $6,384 | | Net income | 10,476 | 1,341 | | Operating cash flows | 15,165 | 1,500 | | Total assets, beginning | 60,905 | 15,884 | | Total assets, ending | 62,905 | 18,000 | **Required:** ### 1. Calculate the return on assets for both companies. Here is a table for the calculation of Return on Assets (ROA): Return on Assets is calculated using the formula: \[ \text{Return on Assets} = \frac{\text{Net Income}}{\text{Average Total Assets}} \] Average Total Assets is calculated as: \[ \text{Average Total Assets} = \frac{\text{Beginning Total Assets} + \text{Ending Total Assets}}{2} \] **Step-by-Step Calculation:** * For Cyberdyne: Average Total Assets = \(\frac{60,905 + 62,905}{2} = 61,905\) Return on Assets = \(\frac{10,476}{61,905}\) * For Virtucon: Average Total Assets = \(\frac{15,884 + 18,000}{2} = 16,942\) Return on Assets = \(\frac{1,341}{16,942}\) | ($ in millions) | | | | Return on Assets | |-----------------|------|---------------------------------------|----------------|------------------| | Cyberdyne | / | \((\frac{\text{Net Income}}{\text{Average Total Assets}})\) | = | | Virtucon | / | \((\frac{\text{Net Income}}{\text{Average Total Assets}})\) | = | ### 2. Calculate the cash return on
## Financial Ratio Analysis ### Cash Return on Assets | | | | = | Cash Return on Assets | |-----------------------|---------------------------|---------------------------|---|---------------------------| | **Cyberdyne** | | | | | | **Virtucon** | | | | | ### Task 3 Calculate the cash flow to sales ratio and the asset turnover ratio for both companies. ### Cash Flow to Sales #### ($ in millions) | | | | = | Cash Flow to Sales | |-----------------------|---------------------------|---------------------------|---|---------------------------| | **Cyberdyne** | | | | | | **Virtucon** | | | | | ### Asset Turnover | | | | = | Asset Turnover | |-----------------------|---------------------------|---------------------------|---|---------------------------| | **Cyberdyne** | | | | _ times | | **Virtucon** | | | | _ times | ### Task 4 Which company has the more favorable ratios? - [ ] Cyberdyne Systems - [ ] Virtucon --- The tables above outline the process and data requirements for calculating key financial ratios: Cash Return on Assets, Cash Flow to Sales, and Asset Turnover. These ratios provide insights into the financial performance and operational efficiency of the companies, Cyberdyne and Virtucon. 1. **Cash Return on Assets**: - This ratio is calculated by dividing net cash flow by total assets, providing an indication of how effectively the company is using its assets to generate cash. 2. **Cash Flow to Sales Ratio**: - This is determined by dividing the company’s operating cash flow by its total sales, offering insight into the proportion of sales that is transformed into cash. 3. **Asset Turnover**: - Calculated by dividing sales by total assets, this ratio measures how efficiently a company is using its assets to produce sales. By comparing these ratios, stakeholders can determine which company, Cyberdyne or Virtucon, exhibits stronger financial health and operational efficiency.
Transcribed Image Text:## Financial Ratio Analysis ### Cash Return on Assets | | | | = | Cash Return on Assets | |-----------------------|---------------------------|---------------------------|---|---------------------------| | **Cyberdyne** | | | | | | **Virtucon** | | | | | ### Task 3 Calculate the cash flow to sales ratio and the asset turnover ratio for both companies. ### Cash Flow to Sales #### ($ in millions) | | | | = | Cash Flow to Sales | |-----------------------|---------------------------|---------------------------|---|---------------------------| | **Cyberdyne** | | | | | | **Virtucon** | | | | | ### Asset Turnover | | | | = | Asset Turnover | |-----------------------|---------------------------|---------------------------|---|---------------------------| | **Cyberdyne** | | | | _ times | | **Virtucon** | | | | _ times | ### Task 4 Which company has the more favorable ratios? - [ ] Cyberdyne Systems - [ ] Virtucon --- The tables above outline the process and data requirements for calculating key financial ratios: Cash Return on Assets, Cash Flow to Sales, and Asset Turnover. These ratios provide insights into the financial performance and operational efficiency of the companies, Cyberdyne and Virtucon. 1. **Cash Return on Assets**: - This ratio is calculated by dividing net cash flow by total assets, providing an indication of how effectively the company is using its assets to generate cash. 2. **Cash Flow to Sales Ratio**: - This is determined by dividing the company’s operating cash flow by its total sales, offering insight into the proportion of sales that is transformed into cash. 3. **Asset Turnover**: - Calculated by dividing sales by total assets, this ratio measures how efficiently a company is using its assets to produce sales. By comparing these ratios, stakeholders can determine which company, Cyberdyne or Virtucon, exhibits stronger financial health and operational efficiency.
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