Sepracor, Inc., a U.S. drug company, reported the following information. The company prepares its financial statements in accordance with U.S. GAAP. Current Liabilities 2007 (,000) $554,114 Convertible Subordinated Debt 648,020 Total Liabilities Stockholders' Equity 1,228,313 176,413 Net Income 58,333 Analysts attempting to compare Sepracor to international drug companies may face a challenge due to differences in accounting for convertible debt under iGAAP. Under IAS 32, Financial Instruments, convertible bonds, at issuance, must be classified separately into their debt and equity components based on estimated fair value. Compute the following ratios for Sepracor, Inc. (assume that year-end balances approximate annual averages.) (1) Return on assets. (2) Return on stockholders' equity (3) Debt to asset ratio

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Sepracor, Inc., a U.S. drug company, reported the following information. The company
prepares its financial statements in accordance with U.S. GAAP.
Current Liabilities
2007 (,000)
$554,114
Convertible Subordinated Debt 648,020
Total Liabilities
Stockholders' Equity
1,228,313
176,413
Net Income
58,333
Analysts attempting to compare Sepracor to international drug companies may face a
challenge due to differences in accounting for convertible debt under iGAAP. Under IAS
32, Financial Instruments, convertible bonds, at issuance, must be classified separately
into their debt and equity components based on estimated fair value.
Compute the following ratios for Sepracor, Inc. (assume that year-end balances
approximate annual averages.)
(1) Return on assets.
(2) Return on stockholders' equity
(3) Debt to asset ratio
Transcribed Image Text:Sepracor, Inc., a U.S. drug company, reported the following information. The company prepares its financial statements in accordance with U.S. GAAP. Current Liabilities 2007 (,000) $554,114 Convertible Subordinated Debt 648,020 Total Liabilities Stockholders' Equity 1,228,313 176,413 Net Income 58,333 Analysts attempting to compare Sepracor to international drug companies may face a challenge due to differences in accounting for convertible debt under iGAAP. Under IAS 32, Financial Instruments, convertible bonds, at issuance, must be classified separately into their debt and equity components based on estimated fair value. Compute the following ratios for Sepracor, Inc. (assume that year-end balances approximate annual averages.) (1) Return on assets. (2) Return on stockholders' equity (3) Debt to asset ratio
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