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*Rounded
a.
1.
Quick ratio*
d.
Operating asset
management
analysis
b.
Current ratio*
c. Receivables
turnover*
Days' sales
uncollected*
P10. Comprehensive Ratio Analysis of Two Companies
Ratio Name
=
6. Company
with More
Favorable Ratio
Lucent
Lucent
Ranbaxy
=
© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
*Rounded
days 14.3
days
i. Financing period
days
Ranbaxy
=
Days' inventory
on hand* Ranbaxy
f.
Lucent
Lucent
times
Ranbaxy= $59,336,000
e. 9.8 times times
days
times
h. =
Inventory turnover* =
P10. Comprehensive Ratio Analysis of Two Companies (Continued)
6. Company
with More
Favorable Ratio
Ranbaxy Ratio Name
g. Payables turnover*
times
days
© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
*Rounded
Profitability and total
asset management
analysis
a.
c. $19,948,800
b.
P10. Comprehensive Ratio Analysis of Two Companies (Continued)
2.
© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
Lucent
P10. Comprehensive Ratio Analysis of Two Companies (Continued)
6. Company
Favorable Ratio
3.
==
1.3
$1,086,000
Ranbaxy
$861,600
$1,086,000
$100,840,000
Ranbaxy
6. Company
with More
Favorable Ratio
times=
Lucent
4. Liquidity analysis
*Rounded
Free cash flow $(2,686,000)
$456,000 $4,200,000$200,000 $2,500,000
c. Neutral
$37,306,400 = 5.3%=
d. Lucent
=
Cash flows to assets*
a. Cash flow yield* $1,086,000 =
$1,086,000
$1,970,000
2.0%
P10. Comprehensive Ratio Analysis of Two Companies (Continued)
Ratio Name Lucent
times
16-55
© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
//
7.
$456,000
5.
Price/earnings
(P/E) ratio*
$1.00
$120.00
Dividend yield*
$120.00
$200,000 shares
=times
200,000
P10. Comprehensive Ratio Analysis of Two Companies (Concluded)
$120.00
= 2.5%0.8% == $3.80
$152.00
=
$8.62 $20.38
= 7.5
$152.00
Lucent Ranbaxy
13.9
16-56
© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
1.
P11. Effect of Alternative Accounting Methods
For the Year Ended December 31, 2014
Minnows Corporation
Alternative Income Statements
Income Statement Using FIFO
and Straight-Line Methods
16-57
© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
2.
3.
*Rounded
Difference in net income:
Inventory Turnover FIFO Method LIFO Method
Straight-line method $ 180,000
Double-declining-balance method 360,000 180,000
$ 15,200
Depreciation:
LIFO 1,493,600
FIFO $1,478,400
Cost of goods sold:
Differences resulting from alternative methods:
Net income using LIFO and double-declining-
Minnows Corporation
P11. Effect of Alternative Accounting Methods (Continued)
Schedule of Differences in Net Income
For the Year Ended December 31, 2014
16-58
© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
4.
*Rounded
FIFO/Straight-Line Methods
depreciation costs against revenues in earlier years. Therefore, analysts would be more
willing to accept a lower return on assets in the LIFO/double-declining-balance case.
P11. Effect of Alternative Accounting Methods (Concluded)
Return on Assets
16-59
© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
1.
Income Statement
For the Year Ended December 31, 2014
Linz Corporation
pany's performance.
P12. Corporate Income Statement
16-60
© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
