Sun Microsystems (trends, ratios stock performance) (LO3) Sun Microsystems is a leading
supplier of computer related products, including servers, workstations, storage devices, and
network switches.
In the letter to stockholders as part of the 2001 annual
Inflation and inventory accounting effect (LO5) The Canton Corporation shows the following
income statement. The firm uses FIFO inventory accounting.
a. Assume in 2011 the same 10,000-unit volume is maintained, but that the sales price increases
by 10 per
Using ratios to determine account balances (LO2) We are given the following information for the
Pettit Corporation.
Current assets are composed of cash, marketable securities, accounts receivable, and inventory.
Calculate the following balance sheet items
Using ratios to construct financial statements (LO2) The following information is from
Harrelson, Inc.s, financial statements. Sales (all credit) were $20 million for 2010.
Fill in the balance sheet:
Answer;
Harrelson Inc.
Sales/total assets
=2
Total asse
Trend analysis (LO4) Quantum Moving Company has the following data. Industry information
also is shown.
As an industry analyst comparing the firm to the industry, are you likely to praise or criticize the
firm in terms of:
a. Net income/Total assets.
b. D
Analysis by affiliates (LO1) Omni Technology Holding Company has the following three
affiliates:
a. Which affiliate has the highest return on sales?
b. Which affiliate has the lowest return on assets?
c. Which affiliate has the highest total asset turnove
Comparing all the ratios (LO2) Using the financial statements for the Snider Corporation,
calculate the 13 basic ratios found in the chapter.
Long-term liabilities:
Answer;
Snider Corporation
Profitability ratios
Profit margin = $120,000/$1,980,000 = 6.06
Analysis by divisions (LO2) The Global Products Corporation has three subsidiaries.
a. Which division has the lowest return on sales?
b. Which division has the highest return on assets?
c. Compute the return on assets for the entire corporation.
d. If the
Ratio computation and analysis (LO2) Given the financial statements for Jones Corporation and
Smith Corporation shown here:
a. To which one would you, as credit manager for a supplier, approve the extension of (shortterm) trade credit? Why? Compute all ra
Trend analysis (LO4) Jodie Foster Care Homes, Inc., shows the following data:
a. Compute the ratio of net income to total assets for each year and comment on the trend.
b. Compute the ratio of net income to stockholders equity and comment on the trend.
Ex
Return on assets analysis (LO2) In January 2001, the Status Quo Company was formed. Total
assets were $500,000, of which $300,000 consisted of depreciable fixed assets. Status Quo uses
straight-line depreciation of $30,000 per year, and in 2001 it estimat
Debt utilization and Du Pont system of analysis (LO3) Using the income statement for
J. Lo Wedding Gowns, compute the following ratios:
a. The interest coverage.
b. The fixed charge coverage.
The total assets for this company equal $160,000. Set up the eq
Turnover ratios (LO2) Jim Shorts Company makes clothing for schools. Sales in 2010 were
$4,000,000. Assets were as follows:
a. Compute the following:
1. Accounts receivable turnover
2. Inventory turnover
3. Fixed asset turnover
4. Total asset turnover
b.
Given the following financial statements for Jones Corporation and Smith Corporation:
a.
b.
To which company would you, as credit manager for a supplier, approve the extension of (shortterm) trade credit? Why? Compute all ratios before answering.
In which
Jerry Rice and Grain Stores has $4,000,000 in yearly sales. The firm earns 3.5 percent on each
dollar of sales and turns over its assets 2.5 times per year. It has $100,000 in current
liabilities and $300,000 in long-term liabilities.
a. What is its retur
Sharpe Razor Company has total assets of $2,500,000 and current assets of $1,000,000. It turns
over its fixed assets 5 times a year and has $700,000 of debt. Its return on sales is
3 percent. What is Sharpes return on stockholders equity?
Answer
Sharpe Ra
Jodie Foster Care Homes, Inc., shows the following data:
Year
2005
2006
2007
2008
a.
b.
Net Income
$118,000
131,000
148,000
175,700
Total Assets
$1,900,000
1,950,000
2,010,000
2,050,000
Stockholders Equity
$ 700,000
950,000
1,100,000
1,420,000
Total Debt
The Griggs Corporation has credit sales of $1,200,000. Given the following ratios, fill in the
balance sheet below.
Total assets turnover.
Cash to total assets.
Accounts receivable turnover.
Inventory turnover.
Current ratio.
Debt to total assets.
2.4 tim
Calloway Products has the following data. Industry information is also shown.
Year
2006
2007
2008
Net Income
$360,000
380,000
380,000
Year
2006
2007
2008
Debt
$1,600,000
1,750,000
1,900,000
Total Assets
$3,000,000
3,400,000
3,800,000
Industry Data on Net
Du Pont system of analysis (LO3) Jerry Rice and Grain Stores has $4,000,000 in yearly sales.
The firm earns 3.5 percent on each dollar of sales and turns over its assets 2.5 times per year. It
has $100,000 in current liabilities and $300,000 in long-term
a. Profitability ratios (LO2) Alpha Industries had an asset turnover of 1.4 times per year. If the
return on total assets (investment) was 8.4 percent, what was Alphas profit margin?
b. The following year, on the same level of assets, Alphas assets turnov
Interpreting results from the Du Pont system of analysis (LO3) Assume the following data for
Cable Corporation and Multi-Media, Inc.
a. Compute return on stockholders equity for both firms using ratio 3a. Which firm has the
higher return?
b. Compute the f
Network Communications has total assets of $1,400,000 and current assets of $600,000. It turns
over its fixed assets 4 times a year. It has $300,000 of debt. Its return on sales is 5 percent. What
is its return on stockholders equity?
Answer
Network Commu
Neon Light Company has $1,000,000 in assets and $600,000 of debt. It reports net income of
$100,000.
a. What is the return on the assets?
b. What is the return on the stockholders equity?
c. If the firm has an asset turnover ratio of 3 times, what is the
Fondren Machine Tools has total assets of $3,000,000 and current assets of $800,000. It turns
over its fixed assets 2.6 times per year. Its return on sales is 6.5 percent. It has $1,200,000 of
debt. What is its return of stockholders equity?
Answer
Fondre
Using the Du Pont method, evaluate the effects of the following relationships for the Lollar
Corporation.
a. Lollar Corporation has a profit margin of 5 percent and its return on assets (investment) is 13.5
percent. What is its assets turnover ratio?
b. I
Construction of income statement and balance sheet (LO1 and 3) For December 31, 2012, the
balance sheet of Baxter Corporation was as follows:
Sales for 2013 were $320,000, and the cost of goods sold was 50 percent of sales. Selling and
administrative expe
Dr.Zhivago Diagnostics Corp. income statements for 2010 is as follows:
a. Compute the profit margin for 2010.
b. Assume in 2011, sales increase by 10 percent and cost of goods sold increases by 20 percent.
The firm is able to keep all other expenses the s
Landers Nursery and Garden Stores has current assets of $220,000 and fixed assets of $170,000.
Current liabilities are $80,000 and long-term liabilities are $140,000. There is $40,000 in
preferred stock outstanding and the firm has issued 25,000 shares of
Statement of cash flows (LO4) Refer to the following financial statements for Crosby
Corporation:
a) Prepare a statement of cash flows for the Crosby Corporation using the general procedures
indicated in Table 210.
b) Describe the general relationship bet