Concept Introduction:
Profitability Measures:
The set of ratios that determines the ability of the company to create earnings or profits with respect to its sales or investments refers to profitability measures or profitability ratios.
Requirement a:
To calculate:
The
Concept Introduction:
Profitability Measures:
The set of ratios that determines the ability of the company to create earnings or profits with respect to its sales or investments refers to profitability measures or profitability ratios.
Requirement b:
To state:
The firms uses the financial leverage more effectively than the other by comparing its percentage of return on investments and return on equity.
Concept Introduction:
Financial Leverage Measures:
The set of ratios that measures the ability of the company to meet its long-term financial obligations such as interest payments on debts, fixed lease payments refers to financial leverage measurement ratios. Financial leverage ratios are also called as debt ratio or equity ratio.
Requirement c:
To calculate:
The debt ratio and debt to equity ratio for Coco-Cola and Pepsi to measure the financial leverage of the company.
Concept Introduction:
Financial Leverage Measures:
The set of ratios that measures the ability of the company to meet its long-term financial obligations such as interest payments on debts, fixed lease payments refers to financial leverage measurement ratios. Financial leverage ratios are also called as debt ratio or equity ratio.
Requirement d:
To state:
The debt and debt/equity ratios calculated make sense relative to the expectations by comparing the results of analysis with return on investment and return on equity.
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Chapter 11 Solutions
Accounting: What the Numbers Mean
- financial accountarrow_forwardhelp me teacher this general accounting qoestionarrow_forwardVanessa Kerr works at Jamrock Building Society in Jamaica. For 2014, she received a basic pay of $65 000 per month, her commissions were $10,000 monthly and she also received a bonus of 5% of her monthly pay. Vanessa contributed 10% of her basic pay to a pension scheme operated by the company. Jamrock pays $30,000 per month to Vanessa's landlord. She drives a car owned by Jamrock, which is 2 years old and was purchased at a cost of $1,200,000. It is estimated that she has up to 50% private usage of the vehicle. Each month, Vanessa receives lunch vouchers worth $6,000, which may be used in Jamrock's canteen or other nearby restaurants. Jamrock provides Vanessa with a cellular phone and agrees to pay a maximum bill of $45,000 per year. For the year, Vanessa's cellular phone bill was $50,000. Jamrock has an approved ESOP plan. For the year 2014, the employees agreed to purchase 6% of the share capital of 10 million shares of $1 each. There are 50 employees in the plan and each employee…arrow_forward
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