Compute the return on assets for the current and prior years and explain the meaning of the change.

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Chapter 5, Problem 5.18E

1.

To determine

Compute the return on assets for the current and prior years and explain the meaning of the change.

2.

To determine

Explain the reasons that would security analysts more likely increase or decrease their estimates of share value on the basis of the change.

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Calculate the profitability ratios of Dernham Inc. in the following table. Convert all calculations to a percentage rounded to two decimal places. Ratio Operating margin Value Year 2 Year 1 61.54% Profit margin 44.39% Return on total assets 17.09% Return on common equity 32.13% Basic earning power 22.22% Decision makers and analysts look deeply into profitability ratios to identify trends in a company's profitability. Profitability ratios give insights into both the survivability of a company and the benefits that shareholders receive. Identify which of the following statements are true about profitability ratios. Check all that apply. A higher operating margin than the industry average indicates either lower operating costs, higher product pricing, or both. If a company's operating margin increases but its profit margin decreases, it could mean that the company paid more in interest or taxes. An increase in the return on assets ratio implies an increase in the assets a firm owns. If a…

Ratio of Liabilities to Stockholders' Equity and Ratio of Fixed Assets to Long-Term Liabilities Recent balance sheet information for two companies in the food industry, Mondelez International, Inc., and The Hershey Company, is as follows (in thousands): Mondelez Hershey Net property, plant, and equipment $8,482,000 $2,130,294 Current liabilities 16,737,000 2,418,566 Long-term debt 12,532,000 3,254,280 Other long-term liabilities 7,747,000 622,908 Stockholders' equity 25,713,000 1,407,266 a. Determine the ratio of liabilities to stockholders' equity for both companies. Round your answers to one decimal place. Mondelez fill in the blank 1 Hershey fill in the blank 2 b. Determine the ratio of fixed assets to long-term liabilities for both companies. Round your answers to one decimal place. Mondelez fill in the blank 3 Hershey fill in the blank 4 c. Although___________uses more debt, it has____________creditor protection and…

Answer 2

Question

Chapter 5, Problem 5.18E

1.

To determine

Compute the return on assets for the current and prior years and explain the meaning of the change.

2.

To determine

Explain the reasons that would security analysts more likely increase or decrease their estimates of share value on the basis of the change.

Expert Solution & Answer

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Check out a sample textbook solution

See solution

Answer 3

Question

Chapter 5, Problem 5.18E

1.

To determine

Compute the return on assets for the current and prior years and explain the meaning of the change.

2.

To determine

Explain the reasons that would security analysts more likely increase or decrease their estimates of share value on the basis of the change.

Expert Solution & Answer

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Check out a sample textbook solution

See solution

Answer 4

Question

Chapter 5, Problem 5.18E

1.

To determine

Compute the return on assets for the current and prior years and explain the meaning of the change.

2.

To determine

Explain the reasons that would security analysts more likely increase or decrease their estimates of share value on the basis of the change.

Expert Solution & Answer

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Check out a sample textbook solution

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Answer 5

Chapter 5, Problem 5.18E

1.

To determine

Compute the return on assets for the current and prior years and explain the meaning of the change.

2.

To determine

Explain the reasons that would security analysts more likely increase or decrease their estimates of share value on the basis of the change.

Answer 6

Chapter 5, Problem 5.18E

1.

To determine

Compute the return on assets for the current and prior years and explain the meaning of the change.

Answer 7

Chapter 5, Problem 5.18E

1.

To determine

Compute the return on assets for the current and prior years and explain the meaning of the change.

Answer 8

2.

To determine

Explain the reasons that would security analysts more likely increase or decrease their estimates of share value on the basis of the change.

Answer 9

2.

To determine

Explain the reasons that would security analysts more likely increase or decrease their estimates of share value on the basis of the change.

Answer 10

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Answer 11

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Answer 12

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Answer 13

Ch. 5 - Prob. 1Q Ch. 5 - Prob. 2Q Ch. 5 - Prob. 3Q Ch. 5 - Explain what a material amount is.Ch. 5 - What basis of accounting (cash or accrual) does...Ch. 5 - Prob. 6Q Ch. 5 - Prob. 7Q Ch. 5 - Prob. 8Q Ch. 5 - Prob. 9Q Ch. 5 - For property, plant, and equipment, as reported on...

Compute the return on assets for the current and prior years and explain the meaning of the change.

Solution Summary: The author calculates the return on assets for the current and prior years and explains the meaning of the change.

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Compute the return on assets for the current and prior years and explain the meaning of the change.

Explain the reasons that would security analysts more likely increase or decrease their estimates of share value on the basis of the change.

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