Accounting Question

accounting_question.xls

Ratio Answer Sheet

Complete the ten ratios below.						: 1
						times
						%
Memo Questions (answer in a word document and in memo format according to the syllabus):
1) What do the liquidity, profitability, and solvency ratios reveal about the financial position of the company?
2) Which users may be interested in each type of ratio?
3) What does the collected data reveal about the performance and position of the company?
ROUND YOUR ANSWERS TO TWO DECIMAL PLACES EXCEPT FOR ANSWERS THAT ARE PERCENTAGES--THEY SHOULD BE ROUNDED TO 4 DECIMAL PLACES. FOR EXAMPLE, IF THE ANSWER IS "1.01 TIMES" MAKE SURE YOU ROUND TO TWO DECIMAL PLACES. IF THE ANSWER IS "45.05%" THIS ANSWER WOULD BE ROUNDED TO 4 DECIMAL PLACES AS IT EQUALS .4505.
				Ratio	Ratio
		Numerator	Denominator	Answer	Expression
LIQUIDITY:
	Current Ratio
	Acid Quick Ratio
	Receivables turnover
	Inventory turnover
PROFITABILITY:
	Asset turnover
	Profit Margin
	Return on Assets
	Return on Equity
SOLVENCY:
	Debt to Total Assets
	Times Interest Earned Ratio

Company C
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(in millions)
				February 3,		January 28,
				2011		2010
ASSETS
Current assets:
	Cash and cash equivalents			$	7,042	$	4,747
	Short-term investments				2,016		5,060
	Accounts receivable, net				4,089		3,563
	Financing receivables, net				1,363		985
	Inventories				576		459
	Other				2,620		2,083
		Total current assets			17,706		16,897
	Property, plant, and equipment, net				2,005		1,691
	Investments				2,691		4,294
	Long-term financing receivables, net				325		199
	Other non-current assets				382		134
		Total assets		$	23,109	$	23,215
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
	Accounts payable			$	9,840	$	8,895
	Accrued and other				6,087		5,241
		Total current liabilities			15,927		14,136
Long-term debt					504		505
Other non-current liabilities					2,549		2,089
		Total liabilities			18,980		16,730
Stockholders’ equity:
	Preferred stock and capital in excess of $.01 par value; shares issued and outstanding: none				0		0
	Common stock and capital in excess of $.01 par value; shares authorized: 7,000; shares issued: 2,818 and 2,769, respectively				9,540		8,195
	Treasury stock, at cost; 488 and 284 shares, respectively				-18007		-10,758
	Retained earnings				12,746		9,174
	Other comprehensive loss				-103		-82
	Other				-47		-44
			Total stockholders’ equity		4,129		6,485
			Total liabilities and stockholders’ equity	$	23,109	$	23,215

Company C
CONSOLIDATED STATEMENTS OF INCOME
(in millions, except per share amounts)
		Fiscal Year Ended
		February 3,		January 28,		January 30,
		2011		2010		2009
Net revenue		$	55,908	$	49,205	$	41,444
Cost of revenue			45,958		40,190		33,892
	Gross margin		9,950		9,015		7,552
Operating expenses:
	Selling, general, and administrative		5,140		4,298		3,544
	Research, development, and engineering		463		463		464
	Total operating expenses		5,603		4,761		4,008
	Operating income		4,347		4,254		3,544
Investment and other income, net			227		191		180
	Income before income taxes		4,574		4,445		3,724
Income tax provision			1,002		1,402		1,079
	Net income	$	3,572	$	3,043	$	2,645
Earnings per common share:
	Basic	$	1.49	$	1.21	$	1.03
	Diluted	$	1.46	$	1.18	$	1.01
Weighted average shares outstanding:
	Basic		2,403		2,509		2,565
	Diluted		2,449		2,568		2,619
Interest expense for this company is $28 million in FY February 2011.