OBJECTIVE: To enable learners to utilize financial ratios as a mechanism to evaluate the firm's financial performance and identify areas for making decisions for improvement REQUIREMENT: Financial Statement Analysis Question Refer to the following financial statements of Delima Corporation for 2019 and 2020: Delima Corporation Income Statements For the year ended 31 December (in millions) 2020 2019 $12,397 7,108 $13,198 7,750 5,448 3,472 Net sales Cost of goods sold Gross profit Selling and administrative expenses Income from operations 5,289 3,299 1,976 1,990 Interest expense 233 248 Other (income) expense, net 11 1,732 503 1,229 Income before income taxes 1,742 Income tax expense 502 Net income 1,240 Delima Corporation Balance Sheets 31 December (in millions) 2020 2019 Assets Current assets Cash $460 $444 Accounts receivables (net) 1,188 1,190 Inventories 1,132 1,056 Other current assets 247 3,027 3,281 225 Total current assets 2,915 3,128 5,804 $11,847 Property (net) 5,593 $11,901 Other assets Total assets Liabilities and Stockholders' Equity Current liabilities $3,313 $3,184 Long-term liabilities Stockholders' equity - common shares Total liabilities and stockholders' equity 6,826 1,762 $11,901 6,509 2.154 $11,847 8 Required: Analyze Delima's financial statement. Include the following ratios for 2020 and discuss your findings (2019 values are provided for comparison): (a) Current ratio (year 2019 – 0.92:1) (b) Inventory turnover (year 2019 – 7.2 times) (c) Debt to assets ratio (year 2019 - 82%)
OBJECTIVE: To enable learners to utilize financial ratios as a mechanism to evaluate the firm's financial performance and identify areas for making decisions for improvement REQUIREMENT: Financial Statement Analysis Question Refer to the following financial statements of Delima Corporation for 2019 and 2020: Delima Corporation Income Statements For the year ended 31 December (in millions) 2020 2019 $12,397 7,108 $13,198 7,750 5,448 3,472 Net sales Cost of goods sold Gross profit Selling and administrative expenses Income from operations 5,289 3,299 1,976 1,990 Interest expense 233 248 Other (income) expense, net 11 1,732 503 1,229 Income before income taxes 1,742 Income tax expense 502 Net income 1,240 Delima Corporation Balance Sheets 31 December (in millions) 2020 2019 Assets Current assets Cash $460 $444 Accounts receivables (net) 1,188 1,190 Inventories 1,132 1,056 Other current assets 247 3,027 3,281 225 Total current assets 2,915 3,128 5,804 $11,847 Property (net) 5,593 $11,901 Other assets Total assets Liabilities and Stockholders' Equity Current liabilities $3,313 $3,184 Long-term liabilities Stockholders' equity - common shares Total liabilities and stockholders' equity 6,826 1,762 $11,901 6,509 2.154 $11,847 8 Required: Analyze Delima's financial statement. Include the following ratios for 2020 and discuss your findings (2019 values are provided for comparison): (a) Current ratio (year 2019 – 0.92:1) (b) Inventory turnover (year 2019 – 7.2 times) (c) Debt to assets ratio (year 2019 - 82%)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Transcribed Image Text:OBJECTIVE: To enable learners to utilize financial ratios as a mechanism to evaluate the firm's financial
performance and identify areas for making decisions for improvement
REQUIREMENT: Financial Statement Analysis
Question
Refer to the following financial statements of Delima Corporation for 2019 and 2020:
Delima Corporation
Income Statements
For the year ended 31 December (in millions)
2020
$13,198
7,750
2019
$12,397
7,108
Net sales
Cost of goods sold
Gross profit
Selling and administrative expenses
Income from operations
5,448
5,289
3,472
3,299
1,976
1,990
Interest expense
233
248
Other (income) expense, net
11
1,732
503
1,229
Income before income taxes
1,742
Income tax expense
502
Net income
1,240
Delima Corporation
Balance Sheets
31 December (in millions)
2020
2019
Assets
Current assets
Cash
$460
$444
Accounts receivables (net)
1,188
1,132
1,190
1,056
225
2,915
3,128
Inventories
Other current assets
247
Total current assets
3,027
3,281
Property (net)
5,593
$11,901
Other assets
5,804
$11,847
Total assets
Liabilities and Stockholders' Equity
Current liabilities
$3,313
$3,184
Long-term liabilities
Stockholders' equity – common shares
Total liabilities and stockholders' equity
6,826
6,509
1.762
$11,901
2.154
$11,847
8
Required:
Analyze Delima's financial statement. Include the following ratios for 2020 and discuss your findings (2019
values are provided for comparison):
(a) Current ratio (year 2019 – 0.92:1)
(b) Inventory turnover (year 2019 – 7.2 times)
(c) Debt to assets ratio (year 2019 – 82%)
(d) Return on assets (year 2019 – 10.8%)
(e) Profit margin (year 2019 – 10.0%)
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