Intermediate Accounting (2nd Edition)
2nd Edition
ISBN: 9780134730370
Author: Elizabeth A. Gordon, Jana S. Raedy, Alexander J. Sannella
Publisher: PEARSON
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Textbook Question
Chapter 5, Problem 5.12E
Profitability Analyses. Use the following excerpt from Dragonfly Corporation’s
| Assets (dollars in millions) | 2019 | 2018 |
| Current Assets | ||
| Cash and Cash Equivalents | $ 13,420 | $ 19.355 |
| Marketable Securities | 7,623 | 2.394 |
| 22,120 | 20,872 | |
| Inventories | 47,415 | 45,630 |
| Prepaid Expenses and Other Receivables | 1,312 | 1,264 |
| Total Current Assets | 91,890 | 89.515 |
| Property, Plant, and Equipment, Net | 67,045 | 65.762 |
| Other Assets | 3,773 | 3,770 |
| Total Assets | $162,708 | $159,047 |
| (in millions) | 2019 | 2018 |
| Sales | $ 63,762 | $ 61,890 |
| Cost of Goods Sold | 33,092 | 30,096 |
| Gross Profit | 30.670 | 31,794 |
| Selling. General, and Administrative Expenses | 15,335 | 15,897 |
| Research and Development Expense | 7,052 | 7,844 |
| Interest Expense | 145 | 142 |
| Earnings Before Taxes | 8,138 | 7,911 |
| Income Tax Expense | 2,848 | 2,769 |
| Net Income | $ 5,290 | $ 5,142 |
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Compute the following measurements for 2020:
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2. Cash flow from Operations to Total Liabilities
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What are the firm’s net profit margins for 2018 and 2019?
Income Statements ($ in millions)
Balance Sheets ($ in millions)
2018
2019
Assets
2018
2019
Sales Revenue
$2,580
$2,865
Cash
$70
$50
Less: Cost of goods sold
$1,060
$1,500
Short-Term investments
$35
$9
Less: Operating Expenses
$105
$162
Accounts rec.
400
460
Less: Depreciation
$85
$80
Inventory
490
556
Earnings before interest and taxes
$1,330
$1,123
Total Current Assets
$995
$1,075
Less: Interest paid
$350
$380
Net fixed assets
1890
1,910
Taxable Income
$980
$743
Less: Taxes (40%)
$392
$297
Total assets
$2,885
2,985
Net income
$588
$446
Liabilities and Owner's Equity
Dividends (45%)
$265
$201
2018
2019
Additions to Retained Earnings
$323
$245
Accounts payable
$240
$210
Accruals
$20
$20
Notes payable
65
74
Total Current…
Selected financial statement information for 2018, 2019, and 2023 for End Run
Corporation is presented below (amounts in millions of dollars):
Accounts receivable
Current assets
Property, plant, and equipment (net)
Total assets
Current liabilities
Long-term debt
Sales
Cost of goods sold
Selling and administrative expenses
Income from continuing operations
Cash flow from operations
Depreciation expense
2020
A. 2020 SAI
B. 2020 LVGI
C. 2020 TATA
D.
2020 Y
E. 2020 earnings manipulation probability
10508
30945
11284
68787
29417
8776
101573
92207
3931
946
4837
518
2019
3905
7438
10744
31289
6595
7223
47860
32090
3315
1063
1127
550
2018
2985
5743
10493
26213
6048
7223
33906
27772
2582
739
1863
550
For 2019 and 2020, compute the following amounts relative to Beneish's eight-factor
earnings
manipulation model:
Chapter 5 Solutions
Intermediate Accounting (2nd Edition)
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