FINANCIAL ACCOUNTING
6th Edition
ISBN: 9781618533111
Author: DYCKMAN
Publisher: Cambridge Business Publishers
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Question
Chapter 1, Problem 32E
a.
To determine
Calculate the return on equity ratio of Company A for the year 2017.
b.
To determine
Compute the debt-to-equity ratio of Company A as of December 31, 2017.
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Calculation and interpretation of ratios.
Data for White Star Limited:
Net operating profit after tax is $25 million (2018: $38 million).
1. Use the information above to calculate for 2019 and 2018:
debt-to-equity ratio
return on equity ratio
earnings per share ratio.
For Financial year 2021:
Current ratio = Current assets / Current liabilities = 43.133 / 29.613 = 1.46 (2.d.p)
Debt-to-equity = Total liabilities / Total equity = (29.613 + 25.382) / 47.069 = 1.17 (2.d.p)
Return on total assets = Net profit / Average total assets = (-11.195) / 101.964 = -0.11 (2.d.p)
Profit margin ratio = Net profit / Net sales = (-11.195) / 81.79 = -0.14 (2.d.p)
Debt-to-asset = Total liabilities / Total assets = (29.613 + 25.382) / 101.964 = 0.54 (2.d.p)
Cash flow on total assets = Net cash flow from operating activities / Average total assets = 4.717 / 101.964 = 0.05 (2.d.p)
For Financial year 2022:
Current ratio = Current assets / Current liabilities = 49.476 / 32.754 = 1.51 (2.d.p)
Debt-to-equity = Total liabilities / Total equity = (32.754 + 27.625) / 46.732 = 1.29 (2.d.p)
Return on total assets = Net profit / Average total assets = (-0.336) / 107.111 = -0.003 (3.d.p)
Profit margin ratio = Net profit / Net sales = (-0.336) / 115.56 = -0.003 (3.d.p)
Debt-to-asset…
Compute DuPont Analysis Ratios
Selected balance sheet and income statement information for Humana Inc., a health and well-being company, follows.
2018
2017
Company
($ millions) Ticker Revenue income Assets Assets
Humana Inc HUM $66,832 $11,603 $35,333 $37,098
2018
Compute the following 2018 ratios for Humana.
a. Return on equity (ROE)
$
$
Note: 1. Select the appropriate numerator and denominator used to compute ROE from the drop-down menu options. 2. Enter the numerator and denominator amounts to compute ROE.
Numerator
Denominator
0 $
$
2018
Net 2018 2017 Stockholders' Stockholders'
0 $
♦
0
b. Profit margin (PM)
Note: 1. Select the appropriate numerator and denominator used to compute PM from the drop-down menu options. 2. Enter the numerator and denominator amounts to compute PM.
Numerator
Denominator
0 $
◆
Equity
$20,081
0
ROE
0
PM
c. Financial leverage (FL)
Note: 1. Select the appropriate numerator and denominator used to compute FL from the drop-down menu options. 2. Enter the…
Chapter 1 Solutions
FINANCIAL ACCOUNTING
Ch. 1 - Prob. 1MCCh. 1 - Prob. 2MCCh. 1 - Prob. 3MCCh. 1 - Prob. 4MCCh. 1 - Prob. 5MCCh. 1 - Prob. 1QCh. 1 - Prob. 2QCh. 1 - Prob. 3QCh. 1 - Prob. 4QCh. 1 - Prob. 5Q
Ch. 1 - Prob. 6QCh. 1 - Prob. 7QCh. 1 - Prob. 8QCh. 1 - Prob. 9QCh. 1 - Prob. 10QCh. 1 - Prob. 11QCh. 1 - Prob. 12QCh. 1 - Prob. 13QCh. 1 - Prob. 14QCh. 1 - Prob. 15QCh. 1 - Prob. 16QCh. 1 - Prob. 17QCh. 1 - Prob. 18QCh. 1 - Prob. 19MECh. 1 - Prob. 20MECh. 1 - Prob. 21MECh. 1 - Prob. 24MECh. 1 - Prob. 25MECh. 1 - Prob. 26MECh. 1 - Prob. 27ECh. 1 - Prob. 28ECh. 1 - Prob. 29ECh. 1 - Prob. 30ECh. 1 - Prob. 31ECh. 1 - Prob. 32ECh. 1 - Prob. 33ECh. 1 - Prob. 34ECh. 1 - Prob. 35ECh. 1 - Prob. 36PCh. 1 - Prob. 37PCh. 1 - Prob. 38PCh. 1 - Prob. 39PCh. 1 - Prob. 40PCh. 1 - Prob. 41PCh. 1 - Prob. 42PCh. 1 - Prob. 43PCh. 1 - Prob. 44PCh. 1 - Prob. 45PCh. 1 - Prob. 46CPCh. 1 - Prob. 47CPCh. 1 - Prob. 48CPCh. 1 - Prob. 49CPCh. 1 - Prob. 50CP
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