Financial Accounting
14th Edition
ISBN: 9781305088436
Author: Carl Warren, Jim Reeve, Jonathan Duchac
Publisher: Cengage Learning
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Chapter 6, Problem 7PEB
a.
To determine
Determine the asset turnover for 2016 and 2015 for Company E.
b.
To determine
Comment whether the change in the asset turnover from 2015 to 2016 indicate a favorable or an unfavorable trend.
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Selected ratios of Company X are shown below:
Inventory turnover
Days' sales uncollected
Days' purchases in accounts payable
Total asset turnover
Equity ratio
Times interest earned
2021
5.3
32.4
21.0
2.6
0.8
N.A.
2020
7.1
18.3
20.0
2.5
0.8
N.A.
Using the financial ratios provided, analyse the performance of Company X in 2021
compared to the previous year.
Determine Profit Margin,Asset Turnover,Earnings Per Share,Price-Earning Ratios, Pay out ratio and Debt to asset ratio for 2016 and 2017 and explain briefly whether or not the company experiences improvement in the financial positon and operating for the period from 2016 to 2017.
Computing and Interpreting Financial Statement Ratios
Following are selected ratios of Norfolk Southern for 2018 and 2017.
Return on Assets (ROA) Component
2018
2017
Profitability (Net income/Sales)
25.3%
53.2%
Productivity (Sales/Average assets)
0.338
0.319
a. Was the company profitable in 2018?Answer
b. Was the company more profitable in 2018 or 2017?Answer
c. Is the change in productivity a positive or negative development?Answer
d. Compute the company’s ROA for 2018 and for 2017.
Note: Round answers to one decimal places (example: 10.4%).
ROA
2018
Answer
2017
Answer
e. From the information provided, which of the following best explains the change in ROA during 2018?
Answer
Chapter 6 Solutions
Financial Accounting
Ch. 6 - Prob. 1DQCh. 6 - Can a business earn a gross profit but incur a net...Ch. 6 - The credit period during which the buyer of...Ch. 6 - What is the meaning of (a) 1/15, n/60; (b) n/30;...Ch. 6 - Prob. 5DQCh. 6 - Prob. 6DQCh. 6 - Prob. 7DQCh. 6 - Name four accounts that would normally appear in...Ch. 6 - Prob. 9DQCh. 6 - Assume that Audio Outfitter Inc. in Discussion...
Ch. 6 - During the current year, merchandise is sold for...Ch. 6 - Prob. 1PEBCh. 6 - Halibut Company purchased merchandise on account...Ch. 6 - Hoffman Company purchased merchandise on account...Ch. 6 - Prob. 3PEACh. 6 - Journalize the following merchandise transactions:...Ch. 6 - Prob. 4PEACh. 6 - Journalize the following merchandise transactions:...Ch. 6 - Prob. 5PEACh. 6 - Prob. 5PEBCh. 6 - Castle Furnishings Companys perpetual inventory...Ch. 6 - Hahn Flooring Companys perpetual inventory records...Ch. 6 - Financial statement data for years ending December...Ch. 6 - Prob. 7PEBCh. 6 - During the current year, merchandise is sold for...Ch. 6 - For a recent year, Best Buy reported sales of...Ch. 6 - The Stationery Company purchased merchandise on...Ch. 6 - A retailer is considering the purchase of 250...Ch. 6 - The debits and credits from four related...Ch. 6 - Prob. 6ECh. 6 - Journalize entries for the following related...Ch. 6 - Prob. 8ECh. 6 - Prob. 9ECh. 6 - After the amount due on a sale of 28,000, terms...Ch. 6 - The debits and credits for three related...Ch. 6 - Prob. 12ECh. 6 - Prob. 13ECh. 6 - Showcase Co., a furniture wholesaler, sells...Ch. 6 - Prob. 15ECh. 6 - Monet Paints Co. is a newly organized business...Ch. 6 - Prob. 17ECh. 6 - Journalize the entries to record the following...Ch. 6 - What is the normal balance of the following...Ch. 6 - Prob. 20ECh. 6 - The following expenses were incurred by a...Ch. 6 - Two items are omitted in each of the following...Ch. 6 - Prob. 23ECh. 6 - Identify the errors in the following income...Ch. 6 - Prob. 25ECh. 6 - Paragon Tire Co.s perpetual inventory records...Ch. 6 - From the following list, identify the accounts...Ch. 6 - Based on the data presented in Exercise 6-23,...Ch. 6 - On July 31, 2016, the balances of the accounts...Ch. 6 - The Home Depot reported the following data (in...Ch. 6 - Kroger, a national supermarket chain, reported the...Ch. 6 - Complete the following table by indicating for (a)...Ch. 6 - The following selected transactions were completed...Ch. 6 - Prob. 34ECh. 6 - Prob. 35ECh. 6 - Prob. 36ECh. 6 - Prob. 37ECh. 6 - Identify the errors in the following schedule of...Ch. 6 - United Rug Company is a small rug retailer owned...Ch. 6 - The following selected transactions were completed...Ch. 6 - The following selected transactions were completed...Ch. 6 - Prob. 3PACh. 6 - The following selected transactions were completed...Ch. 6 - The following selected accounts and their current...Ch. 6 - Selected accounts and related amounts for...Ch. 6 - Selected transactions for Capers Company during...Ch. 6 - Selected transactions for Babcock Company during...Ch. 6 - Selected transactions during August between Summit...Ch. 6 - On December 31, 2016, the balances of the accounts...Ch. 6 - The following selected transactions were completed...Ch. 6 - The following selected transactions were completed...Ch. 6 - The following were selected from among the...Ch. 6 - The following selected transactions were completed...Ch. 6 - The following selected accounts and their current...Ch. 6 - Selected accounts and related amounts for Kanpur...Ch. 6 - Selected transactions for Niles Co. during March...Ch. 6 - Selected transactions for Essex Company during...Ch. 6 - Selected transactions during April between Swan...Ch. 6 - On June 30, 2016, the balances of the accounts...Ch. 6 - Palisade Creek Co. is a merchandising business...Ch. 6 - Prob. 1CPCh. 6 - Prob. 2CPCh. 6 - Prob. 3CP
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- Computing and Interpreting Financial Statement Ratios Following are selected ratios of Norfolk Southern for 2018 and 2017. Return on Assets (ROA) Component 2018 2017 Profitability (Net income/Sales) 24.3% 52.2% Productivity (Sales/Average assets) 0.328 0.309 a. Was the company profitable in 2018?AnswerYesNo b. Was the company more profitable in 2018 or 2017?Answer20172018 c. Is the change in productivity a positive or negative development?AnswerPositiveNegative d. Compute the company’s ROA for 2018 and for 2017.Note: Round answers to one decimal places (example: 10.4%). ROA 2018 Answer 2017 Answerarrow_forwardUsing the financial statements in the image, calculate the following ratios for both the FY 2017 and FY 2018: Current Ratio Quick Ratio Total Asset Turnover Average Collection Total Debt to Total Assets Times Interest Earned Net Profit Margin Return on Assets Return on Equity Modified Du Point Equation for FY 2018 PE Ratio Market to Book Ratioarrow_forwardUsing the fiscal year end 2019 annual report for General Mills, Inc. and the figures from the 2017 annual report as noted below, calculate the financial ratios for 2019 and 2018 indicated using the EXCEL template provided: Gross profit percentage Return on sales Asset turnover Return on assets Return on common stockholders’ equity Current ratio Quick ratio Operating-cash-flow-to-current-liabilities ratio 9. Accounts receivable turnover Total assets 2017 = $21,812.6 Total stockholders’ equity 2017 = $4,327.9 Total current liabilities 2017 = $5,330.8 Accounts receivable 2017 = $1,430.1 Inventory 2017 = $1,483.6 Year-end closing stock price May 2019 = $50.93 Year-end closing stock price May 2018 = $39.37arrow_forward
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