Question
Net sales, net income, and total assets for Aaron Shipping, Inc., for a five-year period follow: (in thousands) 2014 2013 2012 2011 2010 Net sales.
Net sales, net income, and total assets for Aaron Shipping, Inc., for a five-year period follow:
| (in thousands) | 2014 | 2013 | 2012 | 2011 | 2010 |
| Net sales. . . . . . . . . . . | $901 | $404 | $351 | $316 | $292 |
| Net income. . . . . . . . . . | 47 | 36 | 43 | 34 | 26 |
| Total assets. . . . . . . . . | 305 | 272 | 255 | 227 | 210 |
Requirement 1. Compute trend percentages for each item for 2011 through 2014.
Use 2010 as the base year and round to the nearest percent.
| Aaron Shipping, Inc. - Trend Percentages | ||||||||||||
|
| 2014 | 2013 | 2012 | 2011 | 2010 | |||||||
| Net sales. . . . . . . . . . . . . |
| % |
| % |
| % |
| % | 100 | % | ||
| Net income. . . . . . . . . . . |
| % |
| % |
| % |
| % | 100 | % | ||
| Total assets. . . . . . . . . . . |
| % |
| % |
| % |
| % | 100 | % | ||
Requirement 2. Compute the rate of return on net sales for 2012 through 2014, rounding to three decimal places. Explain what this means.
Begin by selecting the rate of return on net sales (return on sales) formula and then enter the amounts to calculate the percentages. (Enter amounts into the formula in thousands. Enter the return on sales amounts as percentages rounded to one decimal place, X.X%.)
|
|
| / |
| = | Return on sales | |
| 2012 |
| / |
| = |
| % |
| 2013 |
| / |
| = |
| % |
| 2014 |
| / |
| = |
| % |
Explain what this means. Return on sales measures:
A) how profitably a company uses its assets
B) the ability to collect cash from credit customers C) the amount of net income for each dollar of net sales
D) the amount of net sales per dollar invested in assets
Requirement 3. Compute asset turnover for 2012 through 2014.
Explain what this means.
Begin by selecting the asset turnover formula and then enter the amounts to calculate the ratios. (Enter amounts into the formula in thousands. Do not round until your final answer, then enter the asset turnover amounts rounded to three decimal places, X.XXX.)
|
|
| / |
| = | Asset turnover | |
| 2012 |
| / |
| = |
| |
| 2013 |
| / |
| = |
| |
| 2014 |
| / |
| = |
| |
Explain what this means. Asset turnover means
A) the ability to collect cash from credit customers
B) the amount of net income for each dollar of net sales
C) the amount of net sales per dollar invested in assets
D) the percentage of assets financed with debt
Requirement 4. Use DuPont analysis to compute rate of return on average total assets (ROA) for 2012
through 2014.
Begin by selecting the ROA formula using the DuPont analysis and then enter the amounts to calculate the ratio. (Enter percentages to one decimal place, X.X%. Enter other component ratios as decimals to three places, X.XXX.)
|
|
| x |
| = | ROA | ||
| 2012 |
| % | x |
| = |
| % |
| 2013 |
| % | x |
| = |
| % |
| 2014 |
| % | x |
| = |
| % |
Requirement 5. How does Aaron Shipping's return on net sales for 2014 compare with previous years? How does it compare with that of the industry? In the shipping industry, rates above 5% are considered good, and rates above 7% are outstanding.
Aaron Shipping's rate of return on net sales for 2014 compares UNFAVOURABLY / FAVOURABLY.
with the industry rate of 5%. It's 2014 rate of return on net sales has DETERORATED / IMPROVED from 2013 and has DETERORATED / IMPROVED from 2012
Requirement 6. Evaluate Aaron Shipping, Inc.'s ROA for 2014, compared with previous years, and against a 15% benchmark for the industry. Aaron Shipping's return on assets (ROA) for 2014 compares UNFAVOURABLY / FAVOURABLY with the 15% benchmark for the industry. It's 2014 ROA has DETERORATED / IMPROVED from 2013 and has DETERORATED / IMPROVED from 2012
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Accounting An Essential Guide To Learning Accounting Quickly
Authors: Greg Shields
1st Edition
1978341873, 978-1978341876
