2. The financial statements of Allstott Corporation follow: (Click the icon to view the assets section of the balance sheet.) (Click the icon to view the liabilities and stockholders' equity sections of the balance sheet.) (Click the icon to view the income statement.) Calculate these profitability measures for 2018. Show each computation. a. Rate of return on sales. b. Asset turnover ratio. Rate of return on total assets. d. Leverage (equity multiplier) ratio. e. Rate of return on common stockholders' equity. f. Is Allstott's profitability strong, medium, or weak? a. Compute the rate of return on sales for 2018. (Enter currency amounts in millions as given in the question. Ignore interest expense in your analysis and enter"0" for any zero balances. Round your answer to the nearest tenth of a percent, X.X%.) = Rate of return on sales b. Compute the asset turnover ratio for 2018. (Enter currency amounts in millions as given in the question. Round average calculations to the nearest whole million. Round the asset turnover ratio to three decimal places, X.XXX.) (4) (5) = Asset turnover ratio c. Compute the rate of return on total assets for 2018. (Enter any ratios to three decimal places, X.XXX, and enter percentages to one decimal place, X.X%.) (6) x (7) = = Rate of return on total assets % d. Compute the leverage (equity multiplier) ratio for 2018. (Abbreviation used; SE = stockholders' equity. Enter currency amounts in millions as given in the question. Round the leverage ratio three decimal place, X.XXX.) = Leverage ratio e. Compute the rate of return on common stockholders' equity for 2018. (Abbreviation used; SE = stockholders' equity. Ignore interest expense in your analysis. Enter "O" for zero balances. Round your answer to one decimal place, XX.X%.) (10) (11) (12) = Rate of return on common SE f. Is Allstott's profitability strong, medium, or weak? These rates of return are (13) - Allstott Corportion Balance Sheets (Adapted) December 31, 2018 and 2017 Increase (Decrease) Amount Percentage (Dollar amounts in millions) 2018 2017 Assets Current assets: Cash and cash equivalents 1,270 $ Short-term investments Receivables, net 160 1,000 $ 40 320 76 372 270 (24) (160) 80 (148) Inventories 156 224 27.0 % (60.0) (50.0) 105.3 (39.8) 1.0 11.5 32.0 Prepaid expenses and other assets 1,826 1,808 18 Total current assets Property, plant, and equipment, net Intangible assets 3,768 1,080 790 3,380 818 780 388 262 10 678 Other assets 1.3 $ 7,464 $ 6,786 $ Total assets 10.0 % Allstott Corporation Balance Sheet (Adpated) December 31, 2018 and 2017 Increase (Decrease) Amount Percentage (Dollar amounts in millions) 2018 2017 Liabilities and Stockholders' Equity Current liabilities: Accounts payable Income tax payable Short-term debt 910 $ 48 200 79 1,237 9.6 % (41.5) 1.5 (6.0) 3.7 Other 830 $ 80 82 (34) 1973 84 (5) 1,193 4 4 588 1,070 732 Total current liabilities Long-term debt 3,071 3,659 1,170 Other liabilities 6,066 5,334 Total liabilities Stockholders' equity: Common stock Retained earnings (6.2) 1,586 (190) 1,690 (240) (104) 50 Accumulated other comprehensive (loss) 20.8 Total stockholders' equity 1,398 1,452 (54) (3.7) $ 7,464 $ 6,786 $ 678 Total liabilities and stockholders' equity 10.0 % $ 2017 9,400 5,000 Allstott Corporation Statements of Income (Adapted) Year Ended December 31, 2018 and 2017 (Dollar amounts in millions) 2018 Net revenues 9,120 $ 5,220 Cost of goods sold Gross profit 3,900 1,600 General and administrative expenses Income from operations 2,300 230 Interest expense, net Income before income taxes 2,070 1,272 Provision for income taxes 798 $ Net income 4,400 3,200 1,200 180 1,020 230 790
