2.6 only

50 CHAPTER 2 Accounting and Financial Decision Making TABLE P2.4 (continued) THE BALANCE SHEET STATEMENT Period Ending Sep 28, 2013 Research Development 4,475,000 Selling General and Administrative 10,830,000 Operating Income or Loss $ 48,999,000 Total Other Income/Expenses Net 1,156,000 Earnings Before Interest And Taxes 50,155,000 Interest Expense Income Before Tax 50,155,000 Income Tax Expense 13,118,000 Minority Interest Net Income From Continuing Ops 37.037.000 Net Income $ 37,037,000 Preferred Stock And Other Adjustments Net Income Applicable To Common Shares $ 37,037,000 Source: Data from Apple Reports Fourth Quarter Results, Apple, October 28, 2013. Sep 29, 2012 3,381,000 10,040,000 $ 55,241,000 522,000 55,763,000 55,763,000 14,030,000 41,733,000 $ 41,733,000 $ 41,733,000 2.5 Table P2.5 on Page 54 summarizes the financial 2.6 R.C. had earnings per share of $8 in year 2015, conditions for Intel Corporation (INTC), a manufac- and it paid a $4 dividend. Book value per share at turer of various computer-processing chips for fiscal year's end was $80. During the same period, the total year 2013. Compute the various financial ratios and retained earnings increased by $24 million. R.C. has interpret the firm's financial health during fiscal year no preferred stock, and no new common stock was 2013. The closing stock price was $25.50 on Decem- issued during the year. If R.C.'s year-end debt (which ber 31, 2013 and the average number of outstanding equals its total liabilities) was $240 million, what was shares was 4.98 billion. the company's year-end debt ratio? (a) Debt ratio 2.7 If Company A uses more debt than Company (b) Times-interest-earned ratio B and both companies have identical operations in (c) Current ratio terms of sales, operating costs, etc., which of the fol- (d) Quick (acid-test) ratio lowing statements is true? (e) Inventory-turnover ratio (a) Company B will definitely have a higher current (1) Days-sales-outstanding ratio. (g) Total-assets-turnover ratio (b) Company B has a higher profit margin on sales than Company A. (h) Profit margin on sales (e) Both companies have identical profit margins on (1) Return on total assets with a tax rate of 40%) sales. 0) Return on common equity (d) Company B's return on total assets would be (k) Price/earnings ratio higher (1) Book value per share