ACTG 2300 Lecture 19: Day 19 Notes

56 views5 pages

purplecicada511

7 Feb 2017

School

Department

Course

Professor

For unlimited access to Class Notes, a Class+ subscription is required.

Document Summary

Operating income = revenues cogs sg&a. Net income = operating income interests taxes. Return on investment (roi) = return / investment = profit / assets. Return on assets (roa) = profit / assets. Measures the return on investments regardless of the financial structure (whether we use internal or external funds) = (revenues operating expenses) / average operating assets. Return on equity (roe) = net income / average equity. Exclude unused assets (own but not using) and financial assets (investments) (beginning balance + ending balance) / 2. Revenue center (revenues: managers are held accountable for generating revenues (ex: sales) Controls some costs but typically are not related to the product cost, strictly related to sales activity. Cost centers (operating expenses: managers are held accountable for expenses. Accountant, production, purchasing, marketing, manufacturing, warehousing, etc: not responsible for actually selling the product\ Profit centers (revenues & operating expenses: managers are held accountable for generating profits.

Related Questions

Required - Using the attached- below- financial statements for Coca-Cola calculate the following ratios for 2014 - Hint: use excel to set up the formulas and amounts to calculate (see below chart)

https://www.sec.gov/Archives/edgar/data/21344/000002134415000005/a2014123110-k.htm

Liquidity ratio
Current assets	92023
Current liabilities	32374
Current ratio is current asset/current liabilities	92023/32374= 2.84
Quick assets=current assets- inventory + prepaid expenses	92023-3100+3066= 91989
Quick ratio is quick assets/current liabilities	91989/32374= 2.84
Calculate debt to equity ratio= Total liabilities/ total stockholder equity
Times interest earned= Earnings before interest and taxes (EBIT)/interest expense
Return on Net Operating Assets â RNOA Net Operating assets RNOA= NPOAT/Average NOA
Net Operating Profit After Taxes â NOPAT Net operating profit after taxes= net income- (nonperatinge revenues-nonoperating expenses)x(1-marginal tax rates)
Net Operating Profit Margin â NOPM NPOM= NOPAT/Sales Revenue
Net Operating Asset Turnover â NOAT NOAT= Sales/Average NOA


Note 1	*Coca-Cola*
	Operating Assets
	Total assets - Non-operating assets
	(ie NOA = Total assets less Short-term investments + Other investments

	Operating Liabilities
	Total liabilities - Non-operating liabilities
	ie NOL = Total liabilities - Loans and notes payable + Current maturities of long-term debt+Long-term debt)

Hillside,Inc.

BALANCE SHEET					INCOME STATEMENT
($ in millions)					($ in millions)

ASSETS		LIABILITIES			Revenue	28,681.10
Cash & Marketable Securities	449.90	Accounts Payable	1,611.20		Cost Of Goods Sold	20,768.80
Accounts Receivable	954.80	Salaries Payable	225.20		Gross Profit	7,912.30
Inventories	3,645.20	Other Current Liabilities	1,118.80
Other Current Assets	116.60	Total Current Liabilities	2,955.20		Operating Expenses:
Total Current Assets	5,166.50				Selling, General & Admin.	5,980.80
		Other Liabilities	693.40		Depreciation	307.30
Machinery & Equipment	1,688.90				Operating income	1,624.20
Land	1,129.70	Total Liabilities	3,648.60
Buildings	2,348.40				Interest	-
Depreciation	(575.60)	SHAREHOLDER'S EQUITY			Other Expense (Income)	(13.10)
Property, Plant & Equip. - Net	4,591.40	Common Stock	828.50		Income Before Taxes	1,637.30
Other Long Term Assets	120.90	Retained Earnings	5,401.70		Income Taxes	618.10
Total Long-Term Assets	4,712.30	Total Shareholder's Equity	6,230.20		Net Income	1,019.20

Total Assets	9,878.80	Total Liabilities & Equity	9,878.80
					Number of Common Stock
					Shares Outstanding	1,032,271


		Input Answers Below		Financial Performance Summary
LIQUIDITY RATIOS
Current Ratio (times)
Quick Ratio (times)
Average Payment Period (days)

ASSET MANAGEMENT RATIOS
Total Asset Turnover (times)
Average Collection Period (days)
Inventory Turnover (times)

FINANCIAL LEVERAGE RATIOS
Total Debt to Total Assets
Equity Multiplier (times)

PROFITABILITY RATIOS
Operating Profit Margin
Net Profit Margin
Return on Total Assets
Return on Equity
Earnings per Share

viridianporcupine777

Financial data for Joel de Paris, Inc., for last year follow:

Joel de Paris, Inc. Balance Sheet
	Beginning Balance		Ending Balance
Assets
Cash	$	135,000	$	128,000
Accounts receivable		345,000		472,000
Inventory		561,000		476,000
Plant and equipment, net		819,000		824,000
Investment in Buisson, S.A.		407,000		430,000
Land (undeveloped)		252,000		252,000
Total assets	$	2,519,000	$	2,582,000
Liabilities and Stockholders' Equity
Accounts payable	$	381,000	$	345,000
Long-term debt		980,000		980,000
Stockholders' equity		1,158,000		1,257,000
Total liabilities and stockholders' equity	$	2,519,000	$	2,582,000

Joel de Paris, Inc. Income Statement
Sales			$	4,700,000
Operating expenses				4,089,000
Net operating income				611,000
Interest and taxes:
Interest expense	$	125,000
Tax expense		190,000		315,000
Net income			$	296,000

The company paid dividends of $197,000 last year. The âInvestment in Buisson, S.A.,â on the balance sheet represents an investment in the stock of another company. The company's minimum required rate of return of 15%.

Required:

1. Compute the company's average operating assets for last year.

2. Compute the companyâs margin, turnover, and return on investment (ROI) for last year. (Round "Margin", "Turnover" and "ROI" to 2 decimal places.)

3. What was the companyâs residual income last year?

ACTG 2300 Lecture 19: Day 19 Notes

Document Summary

Get access

Related Documents

ACCTG 202 Lecture Notes - Lecture 13: Earnings Before Interest And Taxes, Profit Center, Accounts Receivable

FIN 3000 Study Guide - Midterm Guide: Inventory Turnover, Asset Turnover, Reserve Requirement

MFIN1021 Study Guide - Net Present Value

Related Questions