Here are simplified financial statements for Phone Corporation in a recent year: INCOME STATEMENT (Figures in $ millions) Net sales $ 13,600 Cost of goods sold 4,310 Other expenses 4,162 Depreciation 2,668 Earnings before interest and taxes (EBIT) $ 2,460 Interest expense 710 Income before tax $ 1,750 Taxes (at 30%) 525 Net income $ 1,225 Dividends $ 906 BALANCE SHEET (Figures in $ millions) End of Year Start of Year Assets Cash and marketable securities $ 94 $ 163 Receivables 2,632 2,590 Inventories 212 263 Other current assets 892 957 Total current assets $ 3,830 $ 3,973 Net property, plant, and equipment 20,023 19,965 Other long-term assets 4,266 3,820 Total assets $ 28,119 $ 27,758 Liabilities and shareholders’ equity Payables $ 2,614 $ 3,090 Short-term debt 1,444 1,598 Other current liabilities 836 812 Total current liabilities $ 4,894 $ 5,500 Long-term debt and leases 5,773 5,938 Other long-term liabilities 6,228 6,199 Shareholders’ equity 11,224 10,121 Total liabilities and shareholders’ equity $ 28,119 $ 27,758 Calculate the following financial ratios for Phone Corporation: (Use 365 days in a year. Do not round intermediate calculations. Round your final answers to 2 decimal places.) 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 ration (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 l. current ratio (use end-of-year balance sheet figures) m. quick ratio (use end-of-year balance sheet figures

Here are simplified financial statements for Phone Corporation in a recent year: INCOME STATEMENT (Figures in $ millions) Net sales $ 13,600 Cost of goods sold 4,310 Other expenses 4,162 Depreciation 2,668 Earnings before interest and taxes (EBIT) $ 2,460 Interest expense 710 Income before tax $ 1,750 Taxes (at 30%) 525 Net income $ 1,225 Dividends $ 906 BALANCE SHEET (Figures in $ millions) End of Year Start of Year Assets Cash and marketable securities $ 94 $ 163 Receivables 2,632 2,590 Inventories 212 263 Other current assets 892 957 Total current assets $ 3,830 $ 3,973 Net property, plant, and equipment 20,023 19,965 Other long-term assets 4,266 3,820 Total assets $ 28,119 $ 27,758 Liabilities and shareholders’ equity Payables $ 2,614 $ 3,090 Short-term debt 1,444 1,598 Other current liabilities 836 812 Total current liabilities $ 4,894 $ 5,500 Long-term debt and leases 5,773 5,938 Other long-term liabilities 6,228 6,199 Shareholders’ equity 11,224 10,121 Total liabilities and shareholders’ equity $ 28,119 $ 27,758 Calculate the following financial ratios for Phone Corporation: (Use 365 days in a year. Do not round intermediate calculations. Round your final answers to 2 decimal places.) 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 ration (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 l. current ratio (use end-of-year balance sheet figures) m. quick ratio (use end-of-year balance sheet figures

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter7: Analysis Of Financial Statements

Section: Chapter Questions

Problem 1Q: Define each of the following terms: Liquidity ratios: current ratio; quick, or acid test,...

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Here are simplified financial statements for Phone Corporation in a recent year:

INCOME STATEMENT
(Figures in $ millions)
Net sales	$	13,600
Cost of goods sold		4,310
Other expenses		4,162
Depreciation		2,668
Earnings before interest and taxes (EBIT)	$	2,460
Interest expense		710
Income before tax	$	1,750
Taxes (at 30%)		525
Net income	$	1,225
Dividends	$	906

BALANCE SHEET
(Figures in $ millions)
	End of Year		Start of Year
Assets
Cash and marketable securities	$	94		$	163
Receivables		2,632			2,590
Inventories		212			263
Other current assets		892			957
Total current assets	$	3,830		$	3,973
Net property, plant, and equipment		20,023			19,965
Other long-term assets		4,266			3,820
Total assets	$	28,119		$	27,758
Liabilities and shareholders’ equity
Payables	$	2,614		$	3,090
Short-term debt		1,444			1,598
Other current liabilities		836			812
Total current liabilities	$	4,894		$	5,500
Long-term debt and leases		5,773			5,938
Other long-term liabilities		6,228			6,199
Shareholders’ equity		11,224			10,121
Total liabilities and shareholders’ equity	$	28,119		$	27,758

Calculate the following financial ratios for Phone Corporation: (Use 365 days in a year. Do not round intermediate calculations. Round your final answers to 2 decimal places.)

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 ration (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

l. current ratio (use end-of-year balance sheet figures)

m. quick ratio (use end-of-year balance sheet figures)

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)
%
%
days
days
%

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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