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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Textbook Question
Chapter 4, Problem 16PC
Microsoft Corporation (Microsoft) and Oracle Corporation (Oracle) engage in the design, manufacture, and sale of computer software. Microsoft sells and licenses a wide range of systems and application software to businesses, computer hardware manufacturers, and consumer retailers. Oracle sells software for information management almost exclusively to businesses. Exhibit 4.23 presents selected data for the two firms for three recent years.
Exhibit 4.23
REQUIRED
- a. Calculate the accounts receivable turnover ratio for Microsoft and Oracle for Year 1, Year 2, and Year 3.
- b. Suggest possible reasons for the differences in the accounts receivable turnovers of Microsoft and Oracle during the three-year period.
- c. Suggest possible reasons for the changes in the accounts receivable turnover for the two firms over the three-year period.
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Domestic
Assume that Alpha and Omega compete in the same four-digit SIC code industry and offer comparable products and services. The following
table contains their reported financial performance and condition for the last two years:
Alpha Company
Omega Company
Balance Sheet
Year 1 Year 2 Analysis Year 1 Year 2
Analysis
Assets-Cash
250
480
92%
250
480
92%
Assets-Accounts Receivable
250
330
32%
250
530
112%
Assets-Long-Term
500
900
80%
500
900
80%
Assets
1,000
1,710
71% 1,000
1,910
91%
Liabilities-Current
400
750
88%
400
750
88%
Liabilities-Long-Term
200
375
88%
88%
200
375
Liabilities
600
1,125
88%
600
1,125
88%
Stockholders' Equity
400
585
46%
400
785
96%
Liabilities and Stockholders' Equity 1,000
1,710
71% 1,000
1,910
91%
Income Statement
Revenues
1,200 2,20o
83% 1,200 2,400
100%
Costs of Goods Sold
500
925
85%
500
925
85%
Gross Profit
700
1,275
82%
700
1,475
111%
600
82%
600
1,090
82%
Operating Expenses
Operating Income
1,090
185
85%
385
285%
100
100
Statement of Cash Flows
85%
385
285%…
Subject - Accounting
Chapter 4 Solutions
Financial Reporting, Financial Statement Analysis and Valuation
Ch. 4 - Common-Size Analysis. Common-size analysis is a...Ch. 4 - Earnings per Share. Firm A reports an increase in...Ch. 4 - Prob. 3QECh. 4 - Profit Margin for ROA versus ROCE. Describe the...Ch. 4 - Concept and Measurement of Financial Leverage....Ch. 4 - Advantages of Financial Leverage. A company...Ch. 4 - Prob. 7QECh. 4 - Nucor, a steel manufacturer, reported net income...Ch. 4 - Phillips-Van Heusen, an apparel manufacturer,...Ch. 4 - TJX, Inc., an apparel retailer, reported net...
Ch. 4 - Boston Scientific, a medical device manufacturer,...Ch. 4 - Valero Energy, a petroleum company, reported net...Ch. 4 - Exhibit 4.22 presents selected operating data for...Ch. 4 - Microsoft Corporation (Microsoft) and Oracle...Ch. 4 - Prob. 17PCCh. 4 - Prob. 18PCCh. 4 - Texas Instruments (TI) designs and manufactures...Ch. 4 - JCPenney operates a chain of retail department...Ch. 4 - Prob. 21PCCh. 4 - Selected data for General Mills for 2007, 2008,...Ch. 4 - Prob. 23PCCh. 4 - Hasbro is a leading firm in the toy, game, and...Ch. 4 - Fitch sells casual apparel and personal care...Ch. 4 - Prob. 26PCCh. 4 - Starwood Hotels (Starwood) owns and operates many...Ch. 4 - Select data for Avis and Hertz for 2012 follow....Ch. 4 - Integrative Case 1.1 introduced the industry...Ch. 4 - Prob. 1ABICCh. 4 - Prob. 1ACICCh. 4 - Prob. 1BAICCh. 4 - Prob. 1BBICCh. 4 - Walmart and Carrefour follow similar strategies....Ch. 4 - Walmart and Carrefour follow similar strategies....
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