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
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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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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