Financial And Managerial Accounting
15th Edition
ISBN: 9781337902663
Author: WARREN, Carl S.
Publisher: Cengage Learning,
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Textbook Question
Chapter 4, Problem 6MAD
Analyze and compare Alphabet (Google) and Microsoft
Alphabet Inc. (GOOG) and Microsoft Corporation (MSFT) design and distribute consumer and enterprise software, including overlaps in search, business productivity, and mobile operating systems. Alphabet’s primary source of revenue is from advertising, while Microsoft’s is from software subscription and support fees. The following year-end data (in millions) were taken from recent
- a. Compute the
working capital for each company for both years. - b. Which company has the larger working capital at the end of Year 2?
- c. Is working capital a good measure of relative liquidity in comparing the two companies? Explain.
- d. Compute the
current ratio for both companies. Round to one decimal place. - e. Which company has the larger relative liquidity based on the current ratio?
- f. Based on your analysis, comment on the short-term debt-paying ability of these two companies.
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Solution
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Income statements illustrate what revenues the firm collects, the expenses required to support revenues, and the firm's profitability over a specified
period of time. While balance sheets are a "snapshot" of the firm's status on a specific date, income statements reflect performance over a period of
time. Publicly held companies generate income statements every quarter (three months) and for their annual report.
INCOME STATEMENT
(Thousands of dollars)
Net revenues
- Cost of goods sold
- Operating expenses
- Research & development expense
Operating costs excluding depreciation
- Depreciation and amortization expense
Operating income (EBIT)
- Interest expense
Taxable income
- Taxes
Net income
- Preferred dividends
Net income available to common shareholders
Dividends
Addition to retained earnings
The gross margin for this fictional company is:
O 14.7%
O 9.2%
18.2%
60.3%
O 33.3%
$
$
On the income statement, interest expense is
$
Wages are considered a(n)
$
$
In this example, the firm pays…
Chapter 4 Solutions
Financial And Managerial Accounting
Ch. 4 - Why do some accountants prepare an end-of-period...Ch. 4 - Describe the nature of the assets that compose the...Ch. 4 - Prob. 3DQCh. 4 - Prob. 4DQCh. 4 - Why are closing entries required at the end of an...Ch. 4 - Prob. 6DQCh. 4 - What is the purpose of the post-closing trial...Ch. 4 - Prob. 8DQCh. 4 - Which step of the accounting cycle is optional?Ch. 4 - Prob. 10DQ
Ch. 4 - Flow of accounts into financial statements The...Ch. 4 - Prob. 2BECh. 4 - Classified balance sheet The following accounts...Ch. 4 - Closing entries After the accounts have been...Ch. 4 - Accounting cycle From the following list of steps...Ch. 4 - Working capital and current ratio Current assets...Ch. 4 - Flow of accounts into financial statements The...Ch. 4 - Classifying accounts Balances for each of the...Ch. 4 - Financial statements from the end-of-period...Ch. 4 - Financial statements from the end-of-period...Ch. 4 - Income statement The following account balances...Ch. 4 - Income statement; net loss The following revenue...Ch. 4 - Income statement FedEx Corporation (FDX) had the...Ch. 4 - Statement of stockholders equity Climate Control...Ch. 4 - Statement of stockholders equity; net loss...Ch. 4 - Classifying assets Identify each of the following...Ch. 4 - Balance sheet classification At the balance sheet...Ch. 4 - Balance sheet Dynamic Weight Loss Co. offers...Ch. 4 - Balance sheet The following balance sheet was...Ch. 4 - Identifying accounts to be closed From the list...Ch. 4 - Closing entries with net income Automation...Ch. 4 - Closing entries with net loss Summit Services Co....Ch. 4 - Identifying permanent accounts Which of the...Ch. 4 - Post-closing trial balance An accountant prepared...Ch. 4 - Steps in the accounting cycle Rearrange the...Ch. 4 - Completing an end-of-period spreadsheet List (a)...Ch. 4 - Appendix 1 Adjustment data on an end-of-period...Ch. 4 - Prob. 22ECh. 4 - Appendix 1 Financial statements from an...Ch. 4 - Appendix 1 Adjusting entries from an end-of-period...Ch. 4 - Prob. 25ECh. 4 - Reversing entry The following adjusting entry for...Ch. 4 - Adjusting and reversing entries On the basis of...Ch. 4 - Adjusting and reversing entries On the basis of...Ch. 4 - Entries posted to wages expense account Portions...Ch. 4 - Entries posted to wages expense account Portions...Ch. 4 - Financial statements and closing entries Beacons...Ch. 4 - Financial statements and closing entries Foxy...Ch. 4 - T accounts, adjusting entries, financial...Ch. 4 - Ledger accounts, adjusting entries, financial...Ch. 4 - Complete accounting cycle For the past several...Ch. 4 - Financial statements and closing entries Last...Ch. 4 - Financial statements and closing entries The...Ch. 4 - T accounts, adjusting entries, financial...Ch. 4 - Ledger accounts, adjusting entries, financial...Ch. 4 - Complete accounting cycle For the past several...Ch. 4 - The unadjusted trial balance of PS Music as of...Ch. 4 - Kelly Pitney began her consulting business, Kelly...Ch. 4 - Analyze and compare Amazon.com to Best Buy...Ch. 4 - Analyze and compare Zynga, Electronic Arts, and...Ch. 4 - Analyze and compare Foot Locker and The Finish...Ch. 4 - Analyze Under Armour The following year-end data...Ch. 4 - Prob. 5MADCh. 4 - Analyze and compare Alphabet (Google) and...Ch. 4 - Prob. 1TIFCh. 4 - Your friend, Daniel Nat, recently began work as...Ch. 4 - Prob. 4TIFCh. 4 - Prob. 5TIF
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