Problem 3THE DU PONT FORMULA AND RETURN ON TOTAL ASSETS. Industry A has threcompanies whose income statements and balance sheets are summarized below.Company XCompany YCompany ZSales$500,000(d)(g)Net income$ 25.000$30.000(h)Total assetsS100.000(e)$250.000Total asset turnover·0.4(at)()Profit margin(h)(0.4%Return on total assets (ROA)(i)(c)Requirement:Supply the missing data in the table above.Page 74 f 161

The total asset turnover ratio states the entity’s capacity in utilizing its assets in earning…

Problem 3 THE DU PONT FORMULA AND RETURN ON TOTAL ASSETS. Industry A has three companies whose income statements and balance sheets are summarized below. Company X Company Y Company Sales $500,000 (d) (g) Net income S 25.000 S30.000 (h) Total assets S100.000 (e) S250.000 Total asset turnover (t) () 0.4 Profit margin (h) 0.4% 5% Return on total assets (ROA) (i) (c) Requirement: Supply the missing data in the table above. Page 74 of 161

Problem 3 THE DU PONT FORMULA AND RETURN ON TOTAL ASSETS. Industry A has three companies whose income statements and balance sheets are summarized below. Company X Company Y Company Sales $500,000 (d) (g) Net income S 25.000 S30.000 (h) Total assets S100.000 (e) S250.000 Total asset turnover (t) () 0.4 Profit margin (h) 0.4% 5% Return on total assets (ROA) (i) (c) Requirement: Supply the missing data in the table above. Page 74 of 161

Survey of Accounting (Accounting I)

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter15: Capital Investment Analysis

Section: Chapter Questions

Problem 15.5.1MBA

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Question

Problem 3
THE DU PONT FORMULA AND RETURN ON TOTAL ASSETS. Industry A has thre
companies whose income statements and balance sheets are summarized below.
Company X
Company Y
Company Z
Sales
$500,000
(d)
(g)
Net income
$ 25.000
$30.000
(h)
Total assets
S100.000
(e)
$250.000
Total asset turnover·
0.4
(at)
()
Profit margin
(h)
(0.4%
Return on total assets (ROA)
(i)
(c)
Requirement:
Supply the missing data in the table above.
Page 74 f 161

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Your friend, another accountant, has bet you that with your knowledge of accounting and just the computations for common analytical measures, you can figure out many aspects of a company's financial statements. You take the bet! Match each computation to one of the liquidity and solvency measures in the table. (Hint: Begin by looking for simple computations and identifying the amounts in those computations. Look for other measures that use those amounts.) Liquidity and Solvency Measures Computations Working capital $3,095,000 - $900,000 Current ratio $3,095,000 ÷ $900,000 Quick ratio $1,866,000 ÷ $900,000 Accounts receivable turnover $8,250,000 ÷ [($714,000 + $740,000) ÷ 2] Number of days' sales in receivables [($714,000 + $740,000) ÷ 2]÷ ($8,250,000 ÷ 365) Inventory turnover $4,100,000 ÷ [($1,072,000 + $1,100,000) ÷ 2] Number of days' sales in inventory [($1,072,000 + $1,100,000) ÷ 2] ÷ ($4,100,000 ÷ 365) Ratio of fixed assets to long-term liabilities $2,690,000 + $1,690,000 Ratio of…