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Use the sub navigation below to navigate within this series of questions. value:00 points Here are simplified financial statements for Phone...

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 5. value:

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Here are simplified financial statements for Phone Corporation in a recent year:

  

INCOME STATEMENT
(Figures in $ millions)
  Net sales $ 14,000  
  Cost of goods sold 4,510  
  Other expenses 4,212  
  Depreciation 2,788  
 

 

  Earnings before interest and taxes (EBIT) $ 2,490  
  Interest expense 730  
 
  Income before tax $ 1,760  
  Taxes (at 30%) 528  
 
  Net income $ 1,232  
  Dividends $ 946  
 

  

BALANCE SHEET
(Figures in $ millions)
    End of Year   Start of Year  
  Assets                  
     Cash and marketable securities   $ 98     $ 167    
     Receivables     2,832       2,670    
     Inventories      232       283    
     Other current assets     912       977    
       
        Total current assets   $ 4,074     $ 4,097    
     Net property, plant, and equipment     20,063       20,005    
     Other long-term assets     4,306       3,860    
       
        Total assets   $ 28,443     $ 27,962    
       
  Liabilities and shareholders’ equity                  
     Payables   $ 2,654     $ 3,130    
     Short-term debt     1,464       1,618    
     Other current liabilities     856       832    
       
        Total current liabilities   $ 4,974     $ 5,580    
     Long-term debt and leases     4,777       5,222    
     Other long-term liabilities     6,268       6,239    
     Shareholders’ equity     12,424       10,921    
       
        Total liabilities and shareholders’ equity   $ 28,443     $ 27,962    
       

  

Calculate the following financial ratios for Phone Corporation: (Use 365 days in a year. Do not round intermediate calculations. Round your percentage answers "Return on equity", "Return on assets", Return on capital" and "Operating profit margin" to 2 decimal places and the rest to 2 decimal places.)

  

 
 
 
     

 

 

a. Return on equity (Use average equity.)  %
b. Return on assets (Use after-tax operating income and average assets.)  %
c. Return on capital (Use after-tax operating income and average capital.)  %
d. Days in inventory (Use beginning inventory.)  days
e. Inventory turnover (Use beginning inventory.)  
f. Average collection period (Use beginning receivables.)  days
g. Operating profit margin (Use after-tax operating income.)  %
h. Long-term debt ratio (Use end of year values.)  
i. Total debt ratio (Use end of year values.)  
j. Times interest earned  
k. Cash coverage ratio  
l. Current ratio (Use end of year values.)  
m. Quick ratio (Use end of year values.)  

 

 

 

 

 

References eBook & Resources WorksheetDifficulty: BasicLearning Objective: 04-03 Calculate and interpret key measures of operating efficiency, leverage, and liquidity.

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