Problem 13–4B (Concluded)
9. Total asset turnover
10. Return on total assets
11. Return on common stockholders’ equity
Problem 13-5B (60 minutes)
Part 1
Nikon Company
a. Current ratio
b. Acid-test ratio
c. Accounts (and notes) receivable turnover
d. Inventory turnover
e. Days’ sales in inventory
f. Days’ sales uncollected
Short-term credit risk analysis: Nikon and Canon have nearly equal current
Problem 13-5B (Concluded)
Part 2
Nikon Company
a. Profit margin ratio
b. Total asset turnover
c. Return on total assets
d. Return on common stockholders’ equity
e. Price-earnings ratio
f. Dividend yield
Problem 13–6BA (60 minutes)
Part 1 Effect of income taxes (debits or losses in parentheses)
Pretax
25% Tax
Effect
After-Tax
Part 2 Income from continuing operations (and its components)
c.
Net sales ……………………………………………………….
$2,640,000
b.
Interest revenue …………………………………………………….
20,000
Depreciation expense—Equipment ………………………..
k.
d.
Income taxes expense (25%) …………………………..
Problem 13–6BA (Concluded)
Part 3 Income from discontinued segment
Part 4 Net income
SERIAL PROBLEM — SP 13
Serial Problem — SP 13 (45 minutes)
1. Gross margin with services revenue
Gross margin = Total revenue – Cost of goods sold
= $44,000 – $14,052 = $29,948
Reporting in Action — BTN 13–1
1. Trend percents for selected income statement accounts
$ millions
FY 2014
FY 2013
FY 2012
Net Sales ………………………………………………………
116.8%
109.2%
100.0%
$182,795
$170,910
$156,508
127.8%
121.4%
100.0%
$106,606
100.0%
187.7%
221.5%
100.0%
100.0%
100.0%
2. Common-size percents for asset categories and accounts
$ millions
Sep. 27, 2014
Sep. 28, 2013
Total current assets ………………………………………
29.6%
35.4%
$68,531
$73,286
$20,624
$16,597
3.
• For fiscal 2014, revenues grew at a larger percent than cost of sales,
however, for 2013, revenues grew at a lower percent than cost of sales.
Comparative Analysis — BTN 13-2
1.
$ millions
Apple
Google
Cash and equivalents …………
6.0%
$13,844
14.0%
$18,347
Accounts receivable, net …….
7.5%
17,460
7.2%
9,383
0.9%
0.0%
Retained earnings ………………
37.6%
87,152
57.7%
182,795
2. Apple’s retained earnings make up a smaller percentage of its total
3. Apple’s cost of sales percent is higher at 61.4% compared to Google’s
4. Although Apple has more inventory as a percent of total assets (0.9%)
Ethics Challenge — BTN 13-3
1. The CEO appears to have selectively chosen from the 11 available
ratios to present only the ones that show trends that are favorable to
2. The consequences of this action by the CEO might be mixed. It is likely
that the analysts will ask other questions that may reveal some
negative trends such as the trends in return and profit margins. The
Communicating in Practice — BTN 13-4
There is no set solution to this activity. Each team’s memorandum will
vary based on the industry and companies chosen for analysis.
(Instructor: Consider having each team do a brief presentation discussing
Taking It to the Net — BTN 13-5
$ thousands
As of 12/31/2013
As of 12/31/2014
1. Profit margin ratio ……………..
$820,470/$7,146,079= 11.5%
$846,912/$7,421,768= 11.4%
2. Gross profit ratio ………………
Teamwork in Action — BTN 13–6
Part 1
Team reports should look something like the following:
Horizontal Analysis
Horizontal analysis is comparing a company’s financial statement amounts
across time. We compare data from comparative statements that are
horizontally aligned; that is, we compare the same items from one period to
another period. The change disclosed by the comparison is generally
expressed as a dollar amount and/or as a percent. For instance, we
compare sales of one period to sales of another and determine the dollar
amount of the increase or decrease.
We also determine the percent of increase or decrease in sales that this
change represents. This type of comparison is generally completed on a
line–by-line basis for both income statement and balance sheet items (and
sometimes for other financial statements).
Example: Assume that prior year sales equal $240,000, and current year
Teamwork in Action (Concluded)
Vertical Analysis
Vertical analysis is comparing a company’s financial statement amounts to
Example: Total assets for the period being analyzed = $500,000 (base
Part 2
Explanations of the four categories or areas of ratio analysis follow:
a. Liquidity analysis measures the availability of resources to meet short–
Part 3
Each team member presents results to the entire team.
Entrepreneurial Decision — BTN 13-7
Hitting the Road — BTN 13-8
One possible strategy to fulfill the requirements of this assignment is:
Assume that a $37,500 salary will be earned upon graduation at age 25.
Also, assume that the level of investment will be at 8% of your salary (or
$3,000 annually) starting at age 25. By starting at age 25 there will be 40
annual compounding periods until age 65.
Global Decision — BTN 13-9
KRW millions
Samsung
Cash and equivalents …………………………………..
7.3%
₩ 16,840,766
Accounts receivable, net …………………………..
12.3%
28,234,485
7.5%
17,317,504
62.2%
Comparisons and comments:
• Samsung’s cash and equivalents is greater than Apple and less than
Google as a percent of assets.