Question
P2-41. Compare Operating Characteristics Across Industries Following are selected income statement and balance sheet data for companies in different industries. Required a. Compute the following
P2-41. Compare Operating Characteristics Across Industries Following are selected income statement and balance sheet data for companies in different industries.
Required
a. Compute the following ratios for each company.
1. Gross profit/Sales
2. Net income/Sales
3. Net income/Stockholders' equity
4. Liabilities/Stockholders' equity
b. Comment on any differences among the companies' gross profit-to-sales ratios and net income as a percentage of sales. Do differences in the companies' business models explain the differences observed?
c. Which company reports the highest ratio of net income to equity? Suggest one or more reasons for this result.
d. Which company has financed itself with the highest percentage of liabilities to equity? Suggest one or more reasons why this company can take on such debt levels.
| $ millions | Sales | Cost of Goods Sold | Net Income | Assets | Liabilities | Stockholders' Equity |
| Target Corp | $75, 356 | $53,299 | $2,937 | $41,290 | $29,993 | $11,297 |
| Nike Inc | 36,397 | 20,441 | 1,933 | 22,536 | 12,724 | 9,812 |
| Harley-Davidson | 5,717 | 3,352 | 531 | 10,666 | 8,892 | 1,774 |
| Pfizer | 53,647 | 11,248 | 11,188 | 159,422 | 95,664 | 63,758 |
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Auditing Audit Principles Audit Process Vouching And Verification Company Auditor Audit Report.
Authors: Jagtap Subhash
1st Edition
1688008780, 978-1688008786
