Financial Reporting, Financial Statement Analysis and Valuation
8th Edition
ISBN: 9781285190907
Author: James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher: Cengage Learning
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Chapter 10, Problem 10PC
To determine
Calculate property, plant, equipment and
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Texas Instruments (TI) designs and manufactures semiconductor products for use
in computers, telecommunications equipment, automobiles, and other electronics-
based products. The manufacturing of semiconductors is highly capital-intensive.
Hewlett-Packard Corporation (HP) manufactures computer hardware and various
imaging products, such as printers and fax machines. Exhibit 4.25 presents selected
data for TI and HP for three recent years.
Exhibit 4.25 Selected Data for Texas Instruments and Hewlett-Packard
(Amounts in Millions) (Problem 4.19)
Texas Instruments
Sales
Cost of goods sold
Capital expenditures
Average fixed assets
Percentage fixed assets depreciated
Percentage change in sales
Hewlett-Packard
Sales
Cost of goods sold
Capital expenditures
Average fixed assets
Percentage fixed assets depreciated
Percentage change in sales
Required
Year 3
$ 12,501
6,256
763
3,457
54.9%
(9.6)%
$114,552
86,351
3,695
11,050
74.7%
(3.2)%
Year 2
$ 13,835
5,432
686
3,780
52.3%
(3.0)%
$118,364
87,065…
c. Courteney-Cox, Inc., is a Texas-based manufacturer and distributor of components and replacement parts for the auto, machinery,
farm, and construction equipment industries. The company is presently funding a program of capital investment that is necessary to
reduce production costs and thereby meet an onslaught of competition from low-cost suppliers located in Mexico and throughout Latin
America.
Courteney-Cox has a limited amount of capital available and must carefully weigh both the risks and potential rewards associated with
alternative investments. In particular, the company seeks to weigh the advantages and disadvantages of a new investment project, project
X, in light of two other recently adopted investment projects, project Y and project Z:
Per Year
Project X
$10,000
10,000
10,000
10,000
10,000
10,000
10,000
10,000
10,000
10,000
Year
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
PV of Cash Flow @ 5%
Investment
Outlay in 2000:
Calculate the minimum certainty equivalent…
Pfizer Inc. (PFE) discovers, produces, and distributes medicines, including Celebrex and Lipi-tor. Ford Motor Co. (F) develops, markets, and produces automobiles and trucks. Microsoft Corporation (MSFT) develops, produces, and distributes a variety of computer software and hardware products including Windows, Office, Excel, and the Xbox. 1. Without computing the return on assets, rank from highest to lowest Pfizer, Ford, and Microsoft in terms of their return on assets. 2. The following data (in millions) were taken from recent financial statements of each company: Pfizer Ford Net income ................................. Total assets at the beginning of the year...... Total assets at the end of the year ............ $ 21,979 154,229 181,476 $ 17,937 257,035 267,261 Microsoft $ 61,271 301,311 333,779 Compute the return on assets for each company using the preceding data, and rank the companies’ return on assets from highest to lowest. Round the return on assets to one decimal place. 3.…
Chapter 10 Solutions
Financial Reporting, Financial Statement Analysis and Valuation
Ch. 10 - Prob. 1QECh. 10 - The chapter encourages analysts to develop...Ch. 10 - Prob. 3QECh. 10 - Suppose you are analyzing a firm that is...Ch. 10 - Use the following hypothetical data for Walgreens...Ch. 10 - Prob. 6QECh. 10 - Prob. 7QECh. 10 - Prob. 8QECh. 10 - The Home Depot is a leading specialty retailer of...Ch. 10 - Prob. 10PC
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