INCOME STATEMENT(Thousands of dollars)Net revenues- Cost of goods sold- Operating expenses- Research & development expenseOperating costs excluding depreciation- Depreciation and amortization expenseOperating income (EBIT)- Interest expenseTaxable income- TaxesNet income- Preferred dividendsNet income available to common shareholdersDividendsAddition to retained earningsThe gross margin for this fictional company is:O 14.7%O 9.2%O 18.2%O 60.3%$33.3%$7,000(2,781) account to learn about it.(1,809)(912)$ (5,502)(223)(1,275)(190)1,085(434)651$$$$GA GAIn this example, the firm pays half of its earnings as dividends to its stockholders and retains the other half. This is done for simplicity here, but realfirms weigh a multitude of factors in setting their dividends. This issue will be covered in your finance course.Check Your UnderstandingYr 2$(9)642Income StatementRoll your mouse over each income statement321321

Gross margin is one of profitability ratio being used in business. Gross margin means excess of…

INCOME STATEMENT (Thousands of dollars) Net revenues - Cost of goods sold - Operating expenses - Research & development expense Operating costs excluding depreciation - Depreciation and amortization expense Operating income (EBIT) - Interest expense Taxable income - Taxes Net income - Preferred dividends Net income available to common shareholders Dividends Addition to retained earnings The gross margin for this fictional company is: 14.7% 9.2% 18.2% 60.3% $ O 33.3% $ $ $ $ $ $ LA GA $ In this example, the firm pays half of its earnings as dividends to its stockholders and retains the other half. This is done for simplicity here, but firms weigh a multitude of factors in setting their dividends. This issue will be covered in your finance course. Check Your Understanding Yr 2 7,000 (2,781) account to learn about it. (1,809) (912) (5,502) (223) (1,275) (190) 1,085 (434) 651 (9) 642 Income Statement Roll your mouse over each income statement 321 321

INCOME STATEMENT (Thousands of dollars) Net revenues - Cost of goods sold - Operating expenses - Research & development expense Operating costs excluding depreciation - Depreciation and amortization expense Operating income (EBIT) - Interest expense Taxable income - Taxes Net income - Preferred dividends Net income available to common shareholders Dividends Addition to retained earnings The gross margin for this fictional company is: 14.7% 9.2% 18.2% 60.3% $ O 33.3% $ $ $ $ $ $ LA GA $ In this example, the firm pays half of its earnings as dividends to its stockholders and retains the other half. This is done for simplicity here, but firms weigh a multitude of factors in setting their dividends. This issue will be covered in your finance course. Check Your Understanding Yr 2 7,000 (2,781) account to learn about it. (1,809) (912) (5,502) (223) (1,275) (190) 1,085 (434) 651 (9) 642 Income Statement Roll your mouse over each income statement 321 321

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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gross profit ratio
Question: Vertical Analysis of the Income statement Company A Company B Net sales 2,300,000 300,000 Cost of goods sold 1,100,000 200,000 Gross profit 1,200,000 100,000 Operating Expenses: Administrative expenses 120,000 20,000 Marketing expenses 220,000 30,000 Research and Development 500,000 10,000 Total Operating expenses 840,000 60,000 Interest expense 200,000 10,000 Net income 160,000 30,000 Required: Prepare a vertical analysis of these two companies. Compare and contrast the financial situation of these two companies assuming that they are in the same industry. Discuss fully.
profit margin
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Given the following information: $8 million $10 million $7 million $3 million Average Inventory: $6 million Average A/R: Average Fixed Assets: Accounts Payables:$4 million Revenues: $2 million Liabilities: Total Expenses: Cost of Goods Sold: $10 million Assume no other assets or liabilities exist beyond what is articulated above. a. Compute Net Profit Margin b. Compute Total Asset Turnover c. Compute Return on Equity (ROE) d. Compute Inventory Turnover e. How much equity would have to be swapped out for debt to increase ROE by 1% assuming that nothing else changes? f. What is the firm's sustainable growth rate if dividends are equal to $0.5 million?
Given the following information for the Green Company:Net sales (all on account) $5,200,000Interest expense 240,000Income tax expense 280,000Net income 420,000Income tax rate 40%Total assets: January 1, 2010 $1,800,000 December 31, 2010 2,400,000Stockholders' equity: January 1, 2010 1,500,000 December 31, 2010 1,600,000Current assets, December 31, 2010 700,000Quick assets, December 31, 2010 400,000Current liabilities, December 31, 2010 300,000Net accounts receivable: January 1, 2010 200,000 December 31, 2010 180,000 Green's accounts receivable turnover for 2010 was: Question 16 options: a) 2.2 times…
Income Statement Balance Sheet Sales $ 29,300 Assets $ 22,500 Debt $ 6,000 Costs 22,870 Equity 16,500 Net income $ 6,430 Total $ 22,500 Total $ 22,500 The company has predicted a sales increase of 6 percent. Assume the company pays out half of net income in the form of a cash dividend. Costs and assets vary with sales, but debt and equity do not. Prepare the pro forma statements. (Input all amounts as positive values. Do not round intermediate calculations and round your answers to the nearest whole dollar amount.) Pro forma income statement Pro forma balance sheet Sales Assets Debt Costs Equity Net income Total Total What is the external financing needed?
Large Company $ Net sales 379,420 163,100 216,320 Cost of sales Gross profit Selling, general, and administrative $ 146,610 expenses Operating income $ 69,720 Net income 41,610 50,480 Cash and cash equivalents Net receivables 17,400 Inventories 223,430 315,160 Total current assets Property and equipment 81,880 Other assets 66,040 Total assets 463,090 29,540 Accounts payable Stockholder equity 261,130 What is the value of C2C in weeks? (Choose the closest) 31.47 -12.81 -5.82 64.20 4.
Cost of goods sold: Investment income: Net sales: Operating expense: Interest expense: Dividends: Tax rate: Current liabilities: Cash: Long-term debt: Other assets: Fixed assets: Other liabilities: Investments: Operating assets: $ 169,000 $ 1,300 $ 282,000 $ 44,000 Book value per share Earnings per share Cash flow per share $ 7,400 $5,000 21% $ 22,000 $ 21,000 $ 92,000 $ 37,000 $ 120,000 $ 6,000 $ 33,000 $ 64,000 During the year, Smashville, Incorporated, had 20,000 shares of stock outstanding and depreciation expense of $15,000. Calculate the book value per share, earnings per share, and cash flow per share. Note: Do not round intermediate calculations. Round your answers to 2 decimal places. $ 7.75
Return Ratios and Leverage The following selected data are taken from the financial statements of Redwood Enterprises: Sales revenue $641,000 Cost of goods sold 356,000 Gross profit $285,000 Selling and administrative expense 100,000 Operating income $185,000 Interest expense 50,000 Income before tax $135,000 Income tax expense (40%) 54,000 Net income $81,000 Accounts payable $45,000 Accrued liabilities 70,000 Income taxes payable 10,000 Interest payable 25,000 Short-term loans payable 150,000 Total current liabilities $300,000 Long-term bonds payable $500,000 Preferred stock, 10%, $100 par $250,000 Common stock, no par 600,000 Retained earnings 350,000 Total stockholders' equity $1,200,000 Total liabilities and stockholders' equity $2,000,000 Required: 1. Compute the following ratios for Redwood Enterprises: Return on sales Asset turnover (Assume that total assets at the beginning of the year…
Presented below is the income statement of Coming Company: Sales Cost of goods sold Gross profit Operating expenses Income before income taxes $305,000 180,000 $125,000 68,000 57,000 21,400 $35,600 Income taxes Net income In addition, the following information related to net changes in working capital is presented: Cash Accounts receivable Inventories Salaries payable (operating expenses) Accounts payable Income tax payable Debit $9,600 10,000 $15,620 6,400 9,500 2,400 Credit The company also indicates that depreciation expense for the year was $12,360 and that the deferred tax liability account increased $3,080. Required: (a) Compute the net cash flow from operating activities that would be shown on a statement of cash flows using the indirect method. (b) Compute the net cash flow from operating activities that would be shown on a statement of cash flows using the direct method. P47 PPT (c) State the major difference between the two methods in handling statement of cash flows.