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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Ratio Analysis
Based on the Income Statement and Balance Sheet, complete the table below.
Then comment on the liquidity, profitability, leverage, asset management and market value.
Analysis of Financial Data (Table with ratios)
Ratio Analysis
2021
Est.
2020
2019
Industry Average
Liquidity Ratios
Current Ratio (times)
4.2
Quick Ratio (times)
2.1
Asset Management Ratios
Average sales/day
9
Inventory Turnover Ratio (times)
9
Days Sales Outstanding (days)
36
Fixed Assets Turnover Ratio (times)
3
Total Asset Turnover Ratio
1.8
Debt Management Ratios
Total Debt to Total Assets (%)
40
Times Interest Earned (times)
6
Debt to Equity Ratio (%)
1
Profitability Ratios…
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…
DIRECTION: Compute the following
PROFITABILITY RATIOS
Gross Margin= Gross Profit/Net Sales
Net Profit Margin= Net Profit/ Net Sales
Return on Equity= Profit/Shareholder's Equity
Return on Asset= Profit/Total Asset
TREND ANALYSIS
Net Income Growth Rate
Total Assets Growth Rate
And also compute the percentage beside the columns
December 31,
December 31,
PERCENTAGE
2021
2020
USD
USD
Assets
Current assets
Cash and cash equivalents
34,115,412
25,681,845
Short-term financial instruments
71,417,748
80,798,680
Short-term financial assets at amortized cost
2,944,705
2,409,853
Short-term financial assets at fair value through profit or loss
35,624
62,452
Trade receivables
35,585,565
27,065,012
Non-trade receivables
3,930,828
3,150,548
Prepaid expenses
2,042,001
1,980,685
Inventories
36,172,043
28,007,314
Other current assets
4,441,629
3,281,589
Assets held-for-sale
-
812,370
Total Current Assets…
Chapter 5 Solutions
Intermediate Accounting (2nd Edition)
Ch. 5 - What are the three limitations of the income...Ch. 5 - In what way is the income statement useful for...Ch. 5 - Prob. 5.3QCh. 5 - Prob. 5.4QCh. 5 - What management behavior does the term earnings...Ch. 5 - What is the difference between permanent and...Ch. 5 - Prob. 5.7QCh. 5 - Prob. 5.8QCh. 5 - Prob. 5.9QCh. 5 - Prob. 5.10Q
Ch. 5 - What are the six key items to be reported on the...Ch. 5 - Explain why operating income is an important...Ch. 5 - Prob. 5.13QCh. 5 - Prob. 5.14QCh. 5 - What items are included in net income?Ch. 5 - Are items of other comprehensive income included...Ch. 5 - What two choices must companies make when...Ch. 5 - Prob. 5.18QCh. 5 - Prob. 5.19QCh. 5 - Are companies reporting under U.S. GAAP required...Ch. 5 - What accounts are summarized on the statement of...Ch. 5 - What is financial statement analysis?Ch. 5 - Prob. 5.23QCh. 5 - What are comparative financial statements and why...Ch. 5 - What is the difference between vertical and...Ch. 5 - Prob. 5.26QCh. 5 - Explain the difference between return on equity...Ch. 5 - How is a companys profit margin calculated?Ch. 5 - Prob. 5.1MCCh. 5 - Moore Furniture Inc., a public company, has...Ch. 5 - Beach and Poole, CPA is reviewing income statement...Ch. 5 - Prob. 5.4MCCh. 5 - Allison Corporations current year income from...Ch. 5 - Prob. 5.6MCCh. 5 - Chili Co. had the following balances at December...Ch. 5 - Szuba Corporation reported the following...Ch. 5 - Prob. 5.9MCCh. 5 - Prob. 5.1BECh. 5 - Prob. 5.2BECh. 5 - Advantages and Disadvantages of the Income...Ch. 5 - Identify each of the earnings items as primarily...Ch. 5 - Income Statement Presentation. Place the...Ch. 5 - Statement of Net Income Presentation, IFRS. Which...Ch. 5 - Single-Step Statement of Net Income. Carr...Ch. 5 - Statement of Net Income, IFRS. Using the...Ch. 5 - Multiple-Step Statement of Net Income. Using the...Ch. 5 - Condensed Statement of Net Income. Using the...Ch. 5 - Prob. 5.11BECh. 5 - Prob. 5.12BECh. 5 - Discontinued Operations. Jojo, Inc. held a...Ch. 5 - Prob. 5.14BECh. 5 - Prob. 5.15BECh. 5 - Prob. 5.16BECh. 5 - Computation of Retained Earnings. Taxi Cabs, Inc...Ch. 5 - Computation of Contributed Capital. Using the...Ch. 5 - Prob. 5.19BECh. 5 - Prob. 5.20BECh. 5 - Prob. 5.21BECh. 5 - Ratio Analyses. Green Grasshopper Incorporated is...Ch. 5 - Multiple-Step and Single-Step Statements of Net...Ch. 5 - Condensed Statement of Net Income. Using the trial...Ch. 5 - Prob. 5.3ECh. 5 - Prob. 5.4ECh. 5 - Multiple-step Statement of Net Income. The current...Ch. 5 - Condensed Statement of Net Income. Using the...Ch. 5 - Multiple-step income Statement. Ciara s Cookie...Ch. 5 - Prob. 5.8ECh. 5 - Prepare Statement of Stockholders' Equity. Dane...Ch. 5 - Prepare Statement of Stockholders Equity. Ciaras...Ch. 5 - Prepare a Statement of Stockholders' Equity....Ch. 5 - Profitability Analyses. Use the following excerpt...Ch. 5 - Multiple-Step and Single-Step income Statement,...Ch. 5 - Condensed Income Statement. Using the information...Ch. 5 - Multiple-step, Single-step, and Condensed...Ch. 5 - Statement of Net Income Presentation. IFRS....Ch. 5 - Income Statement Presentation, Classification, and...Ch. 5 - Prob. 5.6PCh. 5 - Multiple-step, Single-step, and Condensed...Ch. 5 - Statement of Comprehensive Income Single-and...Ch. 5 - Prepare Statement of Stockholders Equity. Use the...Ch. 5 - Prob. 5.10PCh. 5 - Prob. 1JCCh. 5 - Financial Statement Analysis Case 1: Vertical...Ch. 5 - Prob. 2FSCCh. 5 - Prob. 1SSCCh. 5 - Surfing the Standards Case 2: Amounts Paid by...Ch. 5 - Prob. 1BCCCh. 5 - Prob. 2BCC
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