Financial Accounting: The Impact on Decision Makers
10th Edition
ISBN: 9781305654174
Author: Gary A. Porter, Curtis L. Norton
Publisher: Cengage Learning
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Chapter 13, Problem 13.6E
1.
To determine
Introduction:An indicator that specifies the ability of a company to repay its current obligations is termed the
To calculate: Following ratios for K Company and GM Inc.
- Current ratio
- Quick ratio
2.
To determine
Introduction:Short term obligations that are paid within a year or operating cycle are termed as current liabilities or in other words it can be referred to as a debt that needs to be repaid within a year.
To calculate: Ratio of
3.
To determine
Introduction:Liquidity is a situation in which, the asset of a company can quickly and easilybe converted into cash, i.e., within a short period. Assets that are quickly turned into cash are said to be liquid assets.
To comment: On the liquidity of K Company and GM Inc.
4.
To determine
Introduction: Liquidity is a situation in which, the asset of a company can quickly and easilybe converted into cashi.e. within a short period. Assets that are quickly turned into cash are said to be liquid assets.
To specify: Other ratios that help in determining the liquidity of a company.
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Using 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 = $39.37
Ratio AnalysisPresented below are summary financial data from Pompeo’s annual report:
Amounts in millions
Balance Sheet
Cash and Cash Equivalents
$1,865
Marketable Securities
19,100
Accounts Receivable (net)
9,367
Total Current Assets
39,088
Total Assets
123,078
Current Liabilities
39,255
Long-Term Debt
7,279
Shareholders’ Equity
68,278
Income Statement
Interest Expense
375
Net Income Before Taxes
14,007
Calculate the following ratios:(Round to 2 decimal points)
a. Times-interest-earned ratio
Answer
b. Quick ratio
Answer
c. Current ratio
Answer
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Comparative financial statement data for Blossom Company and Oriole Company, two competitors, appear below. All balance sheet
data are as of December 31, 2022.
Net sales.
Cost of goods sold
Operating expenses
Interest expense
Income tax expense
Current assets
Plant assets (net)
Current liabilities
Long-term liabilities
Net cash common by operating activities
Capital expenditures
Dividends paid on common stock
Weighted-average common shares outstanding
Blossom Company Oriole Company
2022
Net Income
$2,592,000
1,692,000
407,520
9,980
$
122,500
496,600
766,000
95,500
157,020
198,720
129,600
51,840
80,000
2022
$892,800
489,600
141,120
4,240
51,840
213,840
201,160
(a)
Compute the net income and earnings per share for each company for 2022. (Round Earnings per share to 2 decimal places, eg $2.78)
Earnings per share
48,600
58,470
51,840
28,800
21,600
50,000
Chapter 13 Solutions
Financial Accounting: The Impact on Decision Makers
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