04-04-12Class22 EndCh11 begin Ch 16 dilutive secb

Illustration 11 21 chapter 18 48 solutionon notespage

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Unformatted text preview: obtains further insight into the behavior of ROA by disaggregating it into components of profit margin on sales and asset turnover as follows: Rate of Return on Assets Net Income Average Total Assets Chapter 18-46 = = Profit Margin on Sales Net Income Net Sales x x Asset Turnover Net Sales Average Total Assets LO 7 Explain how to report and analyze property, LO plant, equipment, and natural resources. plant, Presentation and Analysis Presentation and Analysis The assets turnover is a measure of a firm’s ability to generate sales from a particular investment in assets. Illustration 11-20 Chapter 18-47 S o lu tio n o n no te s p a g e LO 7 Explain how to report and analyze property, LO plant, equipment, and natural resources. plant, Presentation and Analysis Presentation and Analysis The profit margin on sales is a measure of the ability to generate operating income from a particular level of sales. Illustration 11-21 Chapter 18-48 Solution on notes page LO 7 Explain how to report and analyze property, LO plant, equipment, and natural resources. plant, Presentation and Analysis Presentation and Analysis Rate of Return on Assets measures a firm’s success in using assets to generate earnings. Illustration 11-22 Chapter 18-49 Solution on notes page LO 7 Explain how to report and analyze property, LO plant, equipment, and natural resources. plant, Presentation and Analysis Presentation and Analysis The analyst obtains further insight into the behavior of ROA by disaggregating it into components of profit margin on sales and asset turnover as follows: Rate of Return on Assets Net Income Average Total Assets Chapter 18-50 = = Profit Margin on Sales Net Income Net Sales x x Asset Turnover Net Sales Average Total Assets LO 7 Explain how to report and analyze property, LO plant, equipment, and natural resources. plant, Presentation and Analysis Presentation and Analysis The analyst obtains further insight into the behavior of ROA by disaggregating it into components of profit margin on sales and asset turnover as follows: Rate of Return on Assets $64.2 ($811.8 + 665.3) / 2 8.7% Chapter 18-51 = = = Profit Margin on Sales $64.2 $420.1 15.28% x x x Asset Turnover $420.1 ($811.8 + 665.3) / 2 .569 LO 7 Explain how to report and analyze property, LO plant, equipment, and natural resources. plant, As discussed in the Chapter 4 Convergence Corner, iGAAP permits asset revaluations (which are not permitted in U.S. GAAP). Consequently, companies that use the revaluation framework must follow revaluation depreciation procedures. iGAAP also uses a fair value test to measure the impairment loss. However, iGAAP does not use the first­stage recoverability test used under U.S. GAAP—comparing the undiscounted cash flows to the carrying amount. Thus, the iGAAP test is more strict than U.S. GAAP. Chapter 18-52 Modified Accelerated Cost Recovery System MACRS differs from GAAP in three respects: 1. a mandated tax life, which is generally shorter than the economic life; 2. cost recovery on an accelerated basis; and 3. an assigned...
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This note was uploaded on 04/02/2013 for the course ACCT 415 at USC.

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