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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%)

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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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%)
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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