Ratios Analyses: McCormick McCormick & Company, Inc. is one of the world's leading producers of spices, herbs, seasonings, condiments, and other flavorings for foods. Its products are sold to consumers, with some of the leading brands of spices and seasonings, as well as to industrial producers of foods. McCormick's consolidated balance sheets for 20X2 and 20X3 follow. McCormick: Consolidated Balance Sheets Dollar Amounts in Millions 20X2 20X3 Assets Current Assets Cash and Equivalents $79.0 $63.0 Receivables 465.9 495.5 Inventories 615.0 676.9 Prepaid Expenses and Other Assets 125.5 134.8 Total Current Assets $1,285.4 $1,370.2 Property and Equipment, Net 547.3 576.6 Goodwill 1,695.3 1,798.5 Intangible Assets, net 323.5 333.4 Investments and Other Assets 313.9 371.0 Total Assets $4,165.4 $4,449.7 Liabilities and Shareholders' Equity Current Liabilities Short-Term Borrowings $140.3 $211.6 Current Portion of Long-Term Debt 252.3 2.5 Trade Accounts Payable 375.8 387.3 Other Accrued Liabilities 419.2 461.7 Total Current Liabilities $1,187.6 $1,063.1 Long-Term Debt 779.2 1,019.0 Other Long-Term Liabilities 498.4 419.9 Total Liabilities $2,465.2 $2,502.0 Shareholders' Equity Common Stock 908.2 962.4 Retained Earnings 934.6 970.4 Accumulated Other Comprehensive Loss (159.9) (0.3) Noncontrolling interests 17.3 15.2 Total Shareholders' Equity $1,700.2 $1,947.7 Total Liabilities and Shareholders' Equity $4,165.4 $4,449.7 Additional information for 20X3 is as follows (amounts in millions): Total credit sales (all on credit) $4,123.4 Costs of goods sold 2,457.6 Net income 389.0 Required: Next Level Compute the following ratios for 20X3. Provide a brief description of what each ratio reveals about McCormick. (McCormick uses cash and equivalents, short-term securities, and receivables in their quick ratio calculation.) Return on common equity = (Round your answer to three decimal places.) Debt-to-assets = (Round your answer to three decimal places.) Debt-to-equity = (Round your answer to two decimal places.) Current = (Round your answer to two decimal places.) Quick = (Round your answer to two decimal places.) Inventory turnover days = days (Use 365 days. Round your answer to one decimal place.) Accounts receivable turnover days = days (Use 365 days. Round your answer to one decimal place.) Accounts payable turnover days = days (Use 365 days. Round your answer to one decimal place.) Operating cycle (in days) = days (Use 365 days. Round your answer to one decimal place.) Total asset turnover = (Round your answer to two decimal places.)

Ratios Analyses: McCormick McCormick & Company, Inc. is one of the world's leading producers of spices, herbs, seasonings, condiments, and other flavorings for foods. Its products are sold to consumers, with some of the leading brands of spices and seasonings, as well as to industrial producers of foods. McCormick's consolidated balance sheets for 20X2 and 20X3 follow. McCormick: Consolidated Balance Sheets Dollar Amounts in Millions 20X2 20X3 Assets Current Assets Cash and Equivalents $79.0 $63.0 Receivables 465.9 495.5 Inventories 615.0 676.9 Prepaid Expenses and Other Assets 125.5 134.8 Total Current Assets $1,285.4 $1,370.2 Property and Equipment, Net 547.3 576.6 Goodwill 1,695.3 1,798.5 Intangible Assets, net 323.5 333.4 Investments and Other Assets 313.9 371.0 Total Assets $4,165.4 $4,449.7 Liabilities and Shareholders' Equity Current Liabilities Short-Term Borrowings $140.3 $211.6 Current Portion of Long-Term Debt 252.3 2.5 Trade Accounts Payable 375.8 387.3 Other Accrued Liabilities 419.2 461.7 Total Current Liabilities $1,187.6 $1,063.1 Long-Term Debt 779.2 1,019.0 Other Long-Term Liabilities 498.4 419.9 Total Liabilities $2,465.2 $2,502.0 Shareholders' Equity Common Stock 908.2 962.4 Retained Earnings 934.6 970.4 Accumulated Other Comprehensive Loss (159.9) (0.3) Noncontrolling interests 17.3 15.2 Total Shareholders' Equity $1,700.2 $1,947.7 Total Liabilities and Shareholders' Equity $4,165.4 $4,449.7 Additional information for 20X3 is as follows (amounts in millions): Total credit sales (all on credit) $4,123.4 Costs of goods sold 2,457.6 Net income 389.0 Required: Next Level Compute the following ratios for 20X3. Provide a brief description of what each ratio reveals about McCormick. (McCormick uses cash and equivalents, short-term securities, and receivables in their quick ratio calculation.) Return on common equity = (Round your answer to three decimal places.) Debt-to-assets = (Round your answer to three decimal places.) Debt-to-equity = (Round your answer to two decimal places.) Current = (Round your answer to two decimal places.) Quick = (Round your answer to two decimal places.) Inventory turnover days = days (Use 365 days. Round your answer to one decimal place.) Accounts receivable turnover days = days (Use 365 days. Round your answer to one decimal place.) Accounts payable turnover days = days (Use 365 days. Round your answer to one decimal place.) Operating cycle (in days) = days (Use 365 days. Round your answer to one decimal place.) Total asset turnover = (Round your answer to two decimal places.)

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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Ratios Analyses: McCormick

McCormick & Company, Inc. is one of the world's leading producers of spices, herbs, seasonings, condiments, and other flavorings for foods. Its products are sold to consumers, with some of the leading brands of spices and seasonings, as well as to industrial producers of foods. McCormick's consolidated balance sheets for 20X2 and 20X3 follow.

McCormick: Consolidated Balance Sheets
	Dollar Amounts in Millions
	20X2	20X3
Assets
Current Assets
Cash and Equivalents	$79.0	$63.0
Receivables	465.9	495.5
Inventories	615.0	676.9
Prepaid Expenses and Other Assets	125.5	134.8
Total Current Assets	$1,285.4	$1,370.2
Property and Equipment, Net	547.3	576.6
Goodwill	1,695.3	1,798.5
Intangible Assets, net	323.5	333.4
Investments and Other Assets	313.9	371.0
Total Assets	$4,165.4	$4,449.7
Liabilities and Shareholders' Equity
Current Liabilities
Short-Term Borrowings	$140.3	$211.6
Current Portion of Long-Term Debt	252.3	2.5
Trade Accounts Payable	375.8	387.3
Other Accrued Liabilities	419.2	461.7
Total Current Liabilities	$1,187.6	$1,063.1
Long-Term Debt	779.2	1,019.0
Other Long-Term Liabilities	498.4	419.9
Total Liabilities	$2,465.2	$2,502.0
Shareholders' Equity
Common Stock	908.2	962.4
Retained Earnings	934.6	970.4
Accumulated Other Comprehensive Loss	(159.9)	(0.3)
Noncontrolling interests	17.3	15.2
Total Shareholders' Equity	$1,700.2	$1,947.7
Total Liabilities and Shareholders' Equity	$4,165.4	$4,449.7

Additional information for 20X3 is as follows (amounts in millions):

Total credit sales (all on credit)	$4,123.4
Costs of goods sold	2,457.6
Net income	389.0

Required:

Next Level Compute the following ratios for 20X3. Provide a brief description of what each ratio reveals about McCormick. (McCormick uses cash and equivalents, short-term securities, and receivables in their quick ratio calculation.)

Return on common equity = (Round your answer to three decimal places.)
Debt-to-assets = (Round your answer to three decimal places.)
Debt-to-equity = (Round your answer to two decimal places.)
Current = (Round your answer to two decimal places.)
Quick = (Round your answer to two decimal places.)
Inventory turnover days = days (Use 365 days. Round your answer to one decimal place.)
Accounts receivable turnover days = days (Use 365 days. Round your answer to one decimal place.)
Accounts payable turnover days = days (Use 365 days. Round your answer to one decimal place.)
Operating cycle (in days) = days (Use 365 days. Round your answer to one decimal place.)
Total asset turnover = (Round your answer to two decimal places.)

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