Financial And Managerial Accounting
15th Edition
ISBN: 9781337902663
Author: WARREN, Carl S.
Publisher: Cengage Learning,
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Chapter 11, Problem 1MAD
Analyze and compare Amazon.com and Wal-Mart
Amazon.com, Inc. (AMZN) is one of the largest Internet retailers in the world. Wal-Mart Stores, Inc. (WMT) is the largest retailer in the United States. Amazon and Wal-Mart compete in similar markets; however, Wal-Mart sells through both traditional retail stores and the Internet, while Amazon sells only through the Internet. Interest expense and income before income tax expense from the financial statements of both companies for two recent years follow (in millions):
- a. Compute the times interest earned ratio for both companies for the two years. Round to one decimal place.
- b. Interpret Amazon’s interest coverage from Year 1 to Year 2.
- c. Does a times interest earned ratio less than 1.0 mean that creditors will not get paid interest?
- d. Interpret Wal-Mart’s interest coverage from Year 1 to Year 2.
- e. Which company appears to have the greater protection for creditors?
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Students have asked these similar questions
Analyze and compare Amazon.com and Wal-Mart
Amazon.com, Inc. (AMZN) is one of the largest internet retailers in the world. Wal-Mart Stores, Inc. (WMT) is the largest retailer in the United States. Amazon and Wal-Mart compete in similar markets; however, Wal-Mart sells through both traditional retail stores and the internet, while Amazon sells only through the internet. Interest expense and income before income tax expense from the financial statements of both companies for two recent years follow (in millions):
Amazon
Walmart
Year 2
Year 1
Year 2
Year 1
Interest expense
$484
$459
$2,548
$2,461
Income (loss) before income tax expense
3,892
1,568
21,638
24,799
a. Compute the times interest earned ratio for both companies for the two years. Round your answers to one decimal place.
Amazon
Walmart
Year 2
Year 1
Year 2
Year 1
Times Interest Earned Ratio
Preparing an income statement) Prepare an income statement and a common-sized income statement from the following information.
Click on the following icon in order to copy its contents into a spreadsheet.)
Sales
Cost of goods sold
General and administrative expense
Depreciation expense
Interest expense
Income taxes
Complete the income statement below. (Round to the nearest dollar. NOTE: You may input expense acc as negative values.)
Income Statement
Gross profits
Total operating expenses
Operating income (EBIT)
Earnings before taxes
Net income
$525,863
199,246
60,236
8,305
11,860
98,486
$
SS
Calculate the income before income taxes and net income/less. Please show how you got your answer.
Chapter 11 Solutions
Financial And Managerial Accounting
Ch. 11 - Describe the two distinct obligations incurred by...Ch. 11 - Explain the meaning of each of the following terms...Ch. 11 - If you asked your broker to purchase for you a 12%...Ch. 11 - Prob. 4DQCh. 11 - Prob. 5DQCh. 11 - Prob. 6DQCh. 11 - Prob. 7DQCh. 11 - Fleeson Company needs additional funds to purchase...Ch. 11 - Prob. 9DQCh. 11 - Issuing bonds at face amount On January 1, the...
Ch. 11 - Issuing bonds at a discount On the first day of...Ch. 11 - Prob. 3BECh. 11 - Prob. 4BECh. 11 - Prob. 5BECh. 11 - Prob. 6BECh. 11 - Times interest earned Averill Products Inc....Ch. 11 - Prob. 1ECh. 11 - Entries for issuing bonds Thomson Co. produces and...Ch. 11 - Prob. 3ECh. 11 - Prob. 4ECh. 11 - Prob. 5ECh. 11 - Entries for issuing and calling bonds; gain Mia...Ch. 11 - Prob. 7ECh. 11 - Present value of amounts due Assume that you are...Ch. 11 - Prob. 9ECh. 11 - Present value of an annuity On January 1, you win...Ch. 11 - Prob. 11ECh. 11 - Prob. 12ECh. 11 - Prob. 13ECh. 11 - Prob. 14ECh. 11 - Appendix 2 Amortize premium by interest method...Ch. 11 - Prob. 16ECh. 11 - Prob. 17ECh. 11 - Bond discount, entries for bonds payable...Ch. 11 - Prob. 2PACh. 11 - Entries for bonds payable, including bond...Ch. 11 - Appendix 1 and Appendix 2 Bond discount, entries...Ch. 11 - Prob. 5PACh. 11 - Bond discount, entries for bonds payable...Ch. 11 - Prob. 2PBCh. 11 - Entries for bonds payable, including bond...Ch. 11 - Prob. 4PBCh. 11 - Prob. 5PBCh. 11 - Analyze and compare Amazon.com and Wal-Mart...Ch. 11 - Analyze and compare Clorox and Procter Gamble The...Ch. 11 - Prob. 3MADCh. 11 - Analyze and compare Hilton and Marriott Hilton...Ch. 11 - Prob. 1TIFCh. 11 - Prob. 3TIFCh. 11 - Prob. 4TIF
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