The average price of a gallon of gas in 2015 dropped $0.94 (28 percent) from $3.34 in 2014 (to $2.40 in 2015). Let’s see whether these changes are reflected in the income statement of Insignia Corporation for the year ended December 31, 2015 (amounts in billions).Insignia reported average net fixed assets of $190 billion in 2015 and $146 billion in 2014. Compute the fixed asset turnover ratios for both years. Did the company better utilize its investment in fixed assets to generate revenues in 2015 or 2014?Insignia reported average stockholders’ equity of $180 billion in 2015 and $146 billion in 2014. The company has not issued preferred stock. Compute the return on equity ratios for both years. Did the company generate greater returns for stockholders in 2015 or 2014? 20152014$24512561$258131RevenuesCost of Purchased Crude Oil and Products55Other Operating CostsIncome before Income Tax ExpenseIncome Tax Expense72592835Net Income$ 31$ 37

2015 Calculation 2014 Calculation Fixed Asset Turnover Ratio(Net Sales /…

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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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The average price of a gallon of gas in 2015 dropped $0.94 (28 percent) from $3.34 in 2014 (to $2.40 in 2015). Let’s see whether these changes are reflected in the income statement of Insignia Corporation for the year ended December 31, 2015 (amounts in billions).

Insignia reported average net fixed assets of $190 billion in 2015 and $146 billion in 2014. Compute the fixed asset turnover ratios for both years. Did the company better utilize its investment in fixed assets to generate revenues in 2015 or 2014?
Insignia reported average stockholders’ equity of $180 billion in 2015 and $146 billion in 2014. The company has not issued preferred stock. Compute the return on equity ratios for both years. Did the company generate greater returns for stockholders in 2015 or 2014?

2015
2014
$245
125
61
$258
131
Revenues
Cost of Purchased Crude Oil and Products
55
Other Operating Costs
Income before Income Tax Expense
Income Tax Expense
72
59
28
35
Net Income
$ 31
$ 37

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