Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Here are simplified financial statements for Phone Corporation in a recent year: INCOME STATEMENT (Figures in $ millions) Net sales $ 13,200 Cost of goods

Here are simplified financial statements for Phone Corporation in a recent year:

INCOME STATEMENT
(Figures in $ millions)
Net sales $ 13,200
Cost of goods sold 4,110
Other expenses 4,072
Depreciation 2,548
Earnings before interest and taxes (EBIT) $ 2,470
Interest expense 690
Income before tax $ 1,780
Taxes (at 35%) 623
Net income $ 1,157
Dividends $ 866

BALANCE SHEET
(Figures in $ millions)
End of Year Start of Year
Assets
Cash and marketable securities $ 90 $ 159
Receivables 2,432 2,510
Inventories 192 243
Other current assets 872 937
Total current assets $ 3,586 $ 3,849
Net property, plant, and equipment 19,983 19,925
Other long-term assets 4,226 3,780
Total assets $ 27,795 $ 27,554
Liabilities and shareholders equity
Payables $ 2,574 $ 3,050
Short-term debt 1,424 1,578
Other current liabilities 816 792
Total current liabilities $ 4,814 $ 5,420
Long-term debt and leases 6,769 6,654
Other long-term liabilities 6,188 6,159
Shareholders equity 10,024 9,321
Total liabilities and shareholders equity $ 27,795 $ 27,554

Calculate the following financial ratios for Phone Corporation: (Use 365 days in a year. Do not round intermediate calculations. Round your final answers to 2 decimal places.)

a. Return on equity (use average balance sheet figures) %
b. Return on assets (use average balance sheet figures) %
c. Return on capital (use average balance sheet figures) %
d. Days in inventory (use start-of-year balance sheet figures) days
e. Inventory turnover (use start-of-year balance sheet figures)
f. Average collection period (use start-of-year balance sheet figures) days
g. Operating profit margin %
h. Long-term debt ratio (use end-of-year balance sheet figures)
i. Total debt ratio (use end-of-year balance sheet figures)
j. Times interest earned
k. Cash coverage ratio
l. Current ratio (use end-of-year balance sheet figures)
m. Quick ratio (use end-of-year balance sheet figures)

Need help!

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Accounting Information For Business Decisions

Authors: Billie Cunningham, Loren A. Nikolai, John Bazley, Marie Kavanagh, Geoff Slaughter, Sharelle Simmons

2nd Edition

0170253708, 978-0170253703

Students also viewed these Accounting questions