Survey of Accounting (Accounting I)
8th Edition
ISBN: 9781305961883
Author: Carl Warren
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Question
Chapter 9, Problem 9.4.1C
To determine
Introduction:
Accounting ratios are used to evaluate the financial performance of the business organisation
Profitability analysis:
Profitability analysis is used to evaluate the ability of a company to generate income relative to revenue, assets, operating cost and shareholders' equity during a specific period.
To calculate:
The profitability and stockholders' ratios.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
calculate the efficiency ratios, liquidity ratios, leverage ratios, and profitability ratios for KPC Corporation for this year. Where data is available, also calculate ratios for last year. Use a 360-day year. All sales are on credit to business customers. Assume an income tax rate of 30 percent.
Based on the financial statements calculate the (1) efficiency ratios, (2) liquidity ratios, (3) leverage ratios, and (4) profitability ratios for KPC Corporation for this year. Where data is available, also calculate ratios for last year. Use a 360-day year. All sales are on credit to business customers. Assume an income tax rate of 30 percent.
The following comparative income statement (in thousands of dollars) for two recent fiscal years was adapted from the annual report of Speedway Motorsports, Inc., owner and operator of several major motor speedways, such as the Atlanta, Texas, and Las Vegas Motor Speedways.
Please see the attachment for details:
a. Prepare a comparative income statement for these two years in vertical form, stating each item as a percent of revenues. Round percentages to one decimal place.b. Comment on the significant changes.
Chapter 9 Solutions
Survey of Accounting (Accounting I)
Ch. 9 - What type of analysis is indicated by the...Ch. 9 - Which of the following measures indicates the...Ch. 9 - Prob. 3SEQCh. 9 - Prob. 4SEQCh. 9 - Prob. 5SEQCh. 9 - That is the difference between horizontal and...Ch. 9 - Prob. 2CDQCh. 9 - Prob. 3CDQCh. 9 - Prob. 4CDQCh. 9 - How would the current and quick ratios of a...
Ch. 9 - For Belzcr Corporation, the working capital at the...Ch. 9 - Prob. 7CDQCh. 9 - Prob. 8CDQCh. 9 - a. Why is it advantageous to have a high inventory...Ch. 9 - Prob. 10CDQCh. 9 - Prob. 11CDQCh. 9 - Prob. 12CDQCh. 9 - Prob. 13CDQCh. 9 - Prob. 14CDQCh. 9 - Prob. 15CDQCh. 9 - Favorable business conditions may bring about...Ch. 9 - Prob. 17CDQCh. 9 - Prob. 9.1ECh. 9 - Vertical analysis of income statement The...Ch. 9 - Common-sized income statement Revenue and expense...Ch. 9 - Prob. 9.4ECh. 9 - Prob. 9.5ECh. 9 - Prob. 9.6ECh. 9 - Prob. 9.7ECh. 9 - Current position analysis The bond indenture for...Ch. 9 - Accounts receivable analysis The following data...Ch. 9 - Prob. 9.10ECh. 9 - Inventory analysis The following data were...Ch. 9 - Inventory analysis Costco Wholesale Corporation...Ch. 9 - Ratio of liabilities to stockholders' equity and...Ch. 9 - Prob. 9.14ECh. 9 - Debt ratio, ratio of liabilities to stockholders'...Ch. 9 - Prob. 9.16ECh. 9 - Profitability metrics The following selected data...Ch. 9 - Profitability metrics Macy's, Inc. (M). sells...Ch. 9 - Seven metrics The following data were taken from...Ch. 9 - Prob. 9.20ECh. 9 - Prob. 9.21ECh. 9 - Prob. 9.22ECh. 9 - Unusual income statement items Assume that the...Ch. 9 - Horizontal analysis for income statement For 20Y3....Ch. 9 - Horizontal analysis for income statement For 20Y3....Ch. 9 - Prob. 9.2.1PCh. 9 - Prob. 9.2.2PCh. 9 - Effect of transactions on current position...Ch. 9 - Effect of transactions on current position...Ch. 9 - Twenty metrics of liquidity, solvency, and...Ch. 9 - Twenty metrics of liquidity, solvency, and...Ch. 9 - Twenty metrics of liquidity, solvency, and...Ch. 9 - Twenty metrics of liquidity, solvency, and...Ch. 9 - Twenty metrics of liquidity, solvency, and...Ch. 9 - Twenty metrics of liquidity, solvency, and...Ch. 9 - Prob. 9.4.7PCh. 9 - Twenty metrics of liquidity, solvency, and...Ch. 9 - Twenty metrics of liquidity, solvency, and...Ch. 9 - Twenty metrics of liquidity, solvency, and...Ch. 9 - Twenty metrics of liquidity, solvency, and...Ch. 9 - Twenty metrics of liquidity, solvency, and...Ch. 9 - Twenty metrics of liquidity, solvency, and...Ch. 9 - Twenty metrics of liquidity, solvency, and...Ch. 9 - Twenty metrics of liquidity, solvency, and...Ch. 9 - Twenty metrics of liquidity, solvency, and...Ch. 9 - Twenty metrics of liquidity, solvency, and...Ch. 9 - Twenty metrics of liquidity, solvency, and...Ch. 9 - Twenty metrics of liquidity, solvency, and...Ch. 9 - Prob. 9.4.20PCh. 9 - Trend analysis Critelli Company has provided the...Ch. 9 - Trend analysis Critelli Company has provided the...Ch. 9 - Prob. 9.1CCh. 9 - Prob. 9.2CCh. 9 - Prob. 9.3CCh. 9 - Prob. 9.4.1CCh. 9 - Prob. 9.4.2CCh. 9 - Prob. 9.4.3CCh. 9 - Comprehensive profitability and solvency analysis...Ch. 9 - Comprehensive profitability and solvency analysis...
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Mike Sanders is considering the purchase of Kepler Company, a firm specializing in the manufacture of office supplies. To be able to assess the financial capabilities of the company, Mike has been given the companys financial statements for the 2 most recent years. Required: Note: Round all answers to two decimal places. 1. Compute the following for each year: (a) return on assets, (b) return on stockholders equity, (c) earnings per share, (d) price-earnings ratio, (e) dividend yield, and (f ) dividend payout ratio. 2. CONCEPTUAL CONNECTION Based on the analysis in Requirement 1, would you invest in the common stock of Kepler?arrow_forwardJuroe Company provided the following income statement for last year: Juroes balance sheet as of December 31 last year showed total liabilities of 10,250,000, total equity of 6,150,000, and total assets of 16,400,000. Required: 1. Calculate the return on sales. (Note: Round the percent to two decimal places.) 2. CONCEPTUAL CONNECTION Briefly explain the meaning of the return on sales ratio, and comment on whether Juroes return on sales ratio appears appropriate.arrow_forwardNeed answerarrow_forward
- Neiman Marcus Group (NMG) is one of the largest luxury fashion retailers in the world. Kohls Corporation (KSS) sells moderately priced private and national branded products through more than 1,100 department stores located throughout the United States. The current assets and current liabilities at the end of a recent year for both companies are as follows (in millions): a. Would an analysis of working capital between the two companies be meaningful? Explain. b. Compute the quick ratio for both companies. Round to one decimal place. c. Interpret your results.arrow_forwardCalculate 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…arrow_forwardg-h?arrow_forward
- Why are Old Men so Daggum Stubborn (OMDS) had the following information for the previous calendar year: Operating income: $66,880 Invested assets: $167,200 Sales: $836,000 What is OMDS' investment turnover? For percentages, please enter your answer as a decimal (i.e., 20% is 0.20). For dollar amounts, please provide your answer to two decimal places (i.e. $3.00 is 3.00)arrow_forwardWhat is thearrow_forwardplease provide answer with calculatinoarrow_forward
- Ralph Lauren Corporation sells apparel through company-owned retail stores. Recent financial information for Ralph Lauren follows (in thousands): Please see the attachment for details: Assume that the apparel industry average return on total assets is 8.0% and the average return on stockholders’ equity is 10.0% for the year ended April 2, Year 3.a. Determine the return on total assets for Ralph Lauren for fiscal Years 2 and 3. Round percentages to one decimal place.b. Determine the return on stockholders’ equity for Ralph Lauren for fiscal Years 2 and 3. Round percentages to one decimal place.c. Evaluate the two-year trend for the profitability ratios determined in (a) and (b).d. Evaluate Ralph Lauren’s profit performance relative to the industry.arrow_forwardCoke and Pepsi are well-known international brands. Coca-Cola Co. sells more than $34.5 billion each year while annual sales of PepsiCo products exceed $66 billion. Compare the two companies as a potential investment based on the following ratios as reported by csimarket.com for the twelve months ended September 27, 2019: Ratio a. Gross profit percentage b. Net profit margin c. EPS d. Inventory turnover ratio e. Current ratio. f. Debt-to-assets g. P/E ratio a. Gross profit percentage b. Net profit margin c. EPS Coca-Cola 61.30% 22.70% $ 1.66 4.20 0.62 0.76 32.50 d. Inventory turnover ratio e. Current ratio f. Debt-to-assets g. P/E ratio PepsiCo 55.00% 18.80% $ 8.82 8.30 Required: 1. For each ratio listed, indicate whether it would be used to compare profitability, liquidity, or solvency, or whether it is not applicable (NA) to comparing companies. 0.95 0.82 15.50arrow_forwardWhy are Old Men so Daggum Stubborn (OMDS) had the following information for the previous calendar year: Operating income: $66,880 Invested assets: $167,200 Sales: $836,000 What is OMDS' return on investment? For percentages, please enter your answer as a decimal (i.e., 20% is 0.20). For dollar amounts, please provide your answer to two decimal places (i.e. $3.00 is 3.00)arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Managerial AccountingAccountingISBN:9781337912020Author:Carl Warren, Ph.d. Cma William B. TaylerPublisher:South-Western College PubManagerial Accounting: The Cornerstone of Busines...AccountingISBN:9781337115773Author:Maryanne M. Mowen, Don R. Hansen, Dan L. HeitgerPublisher:Cengage LearningFinancial AccountingAccountingISBN:9781337272124Author:Carl Warren, James M. Reeve, Jonathan DuchacPublisher:Cengage Learning
- Financial AccountingAccountingISBN:9781305088436Author:Carl Warren, Jim Reeve, Jonathan DuchacPublisher:Cengage LearningFinancial And Managerial AccountingAccountingISBN:9781337902663Author:WARREN, Carl S.Publisher:Cengage Learning,
Managerial Accounting
Accounting
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:South-Western College Pub
Managerial Accounting: The Cornerstone of Busines...
Accounting
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Cengage Learning
Financial Accounting
Accounting
ISBN:9781337272124
Author:Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:Cengage Learning
Financial Accounting
Accounting
ISBN:9781305088436
Author:Carl Warren, Jim Reeve, Jonathan Duchac
Publisher:Cengage Learning
Financial And Managerial Accounting
Accounting
ISBN:9781337902663
Author:WARREN, Carl S.
Publisher:Cengage Learning,
How To Analyze an Income Statement; Author: Daniel Pronk;https://www.youtube.com/watch?v=uVHGgSXtQmE;License: Standard Youtube License