Here are simplified financial statements for Phone Corporation in 2020: INCOME STATEMENT (Figures in $ millions) Net sales Cost of goods sold Other expenses Depreciation Earnings before interest and taxes (EBIT) Interest expense Income before tax Taxes (at 21%) Net income Dividends BALANCE SHEET $ 12,600 3,760 4,127 2,338 $ 2,375 - 655 $ 1,720 361 $ 1,359 $ 816
Here are simplified financial statements for Phone Corporation in 2020: INCOME STATEMENT (Figures in $ millions) Net sales Cost of goods sold Other expenses Depreciation Earnings before interest and taxes (EBIT) Interest expense Income before tax Taxes (at 21%) Net income Dividends BALANCE SHEET $ 12,600 3,760 4,127 2,338 $ 2,375 - 655 $ 1,720 361 $ 1,359 $ 816
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Vijay

Transcribed Image Text:Here are simplified financial statements for Phone Corporation in 2020:
INCOME STATEMENT
(Figures in $ millions)
Net sales
Cost of goods sold
Other expenses
Depreciation
Earnings before interest and taxes (EBIT)
Interest expense
Income before tax
Taxes (at 21%)
Net income
Dividends
Assets
Cash and marketable securities
Receivables
Inventories
1200
Other current assets
Total current assets
Net property, plant, and equipment
Other long-term assets
Total assets.
BALANCE SHEET
(Figures in $ millions)
Liabilities and shareholders' equity
Payables
Short-term debt
$ 12,600
3,760
4,127
2,338
$ 2,375
-655
$ 1,720
361
$ 1,359
$ 816
Other current liabilities
Total current liabilities
Long-term debt and leases
Other long-term liabilities
Shareholders' equity
Total liabilities and shareholders' equity
End of Year Start of Year
a. Return on equity (use average balance sheet figures)
b. Return on assets (use average balance sheet figures)
c. Return on capital (use average balance sheet figures)
d. Days in inventory (use start-of-year balance sheet figures)
e. Inventory turnover (use start-of-year balance sheet figures)
f. Average collection period (use start-of-year balance sheet figures)
g. Operating profit margin
h. Long-term debt ratio (use end-of-year balance sheet figures)
i. Total debt ratio (use end-of-year balance sheet figures)
j. Times interest earned
k. Cash coverage ratio
1. Current ratio (use end-of-year balance sheet figures)
m. Quick ratio (use end-of-year balance sheet figures)
$83
2,082
157
837
$ 3,159
19,913
4,156
$ 27,228
$ 2,504
1,389
781
$ 4,674
8,512
6,118
7,924
$ 27,228
$152
2,370
208
902
$ 3,632
19,855
3,710
$ 27,197
$ 2,980
1,543
757
$ 5,280
7,907
6,089
7,921
$ 27,197
Calculate the following financial ratios for Phone Corporation:
Note: Use 365 days in a year. Do not round intermediate calculations. Round your final answers to 2 decimal places
14.11%
4.11 %
10.68 %
20.19 days
18.08
68.65 days
18.85 %
0.54
0.71
3.63
7.20
0.68
0.64
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