FINANCIAL ACCOUNTING
6th Edition
ISBN: 9781618533111
Author: DYCKMAN
Publisher: Cambridge Business Publishers
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Question
Chapter 1, Problem 46CP
a.
To determine
Prepare income statements of Company S for the years ended September 30, 2018 and October 1, 2017.
b.
To determine
Compute the return on equity ratio of company S for the year 2018 and 2017.
c.
To determine
Ascertain the debt-to-equity ratio for the year 2018 and 2017.
d.
To determine
Indicate the effect of one-time litigation charge on the company’s return on equity ratio.
e.
To determine
Discuss the costs and benefits of disclosing the information about the pending litigation in its 2017 annual report.
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Selected balance sheet and income statement information for Humana Inc., a health and well-being company, follows.
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Humana Inc HUM $66,832 $11,603 $35,333 $37,098
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a. Return on equity (ROE)
$
$
Note: 1. Select the appropriate numerator and denominator used to compute ROE from the drop-down menu options. 2. Enter the numerator and denominator amounts to compute ROE.
Numerator
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0 $
$
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Net 2018 2017 Stockholders' Stockholders'
0 $
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0
b. Profit margin (PM)
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Numerator
Denominator
0 $
◆
Equity
$20,081
0
ROE
0
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c. Financial leverage (FL)
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Calculate the financial indicators of the firm Merck for the year 2018 and fill in the spaces marked in the table.
Company Name:
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…………..
Solvency or Debt Ratios
Merck
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Debt ratio
….
….
0.47
Debt-to-equity ratio
….
….
0.38
Interest coverage ratio
….
….
-9.43
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Current ratio
….
….
3.47
Quick ratio
….
….
2.12
Cash ratio
….
….
2.24
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Profit margin
….
….
-93.4%
ROE (Return on equity), after tax
….
….
-248.5
ROA (Return on assets)
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-146.5
Gross margin
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….
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….
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The below tables shows Dynamic Mattress’s year-end 2016 and 2018 balance sheets, and its income statement for 2017.
Dynamic MattressYear-End Balance Sheet for 2016(figures in $ millions)
Assets
Liabilities and Shareholders’ Equity
Current Assets:
Current Liabilities:
Cash
$
22
Bank loans
$
22
Marketable securities
11
Accounts payable
80
Accounts receivable
111
Inventory
155
Total current assets
$
299
Total current liabilities
$
102
Fixed assets:
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$
251
Long-term debt
26
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Net worth (equity and retained earnings)
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479
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Dynamic MattressYear-End Balance Sheet for 2017(figures in $ millions)
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32.0
Debt due within a year (bank…
Chapter 1 Solutions
FINANCIAL ACCOUNTING
Ch. 1 - Prob. 1MCCh. 1 - Prob. 2MCCh. 1 - Prob. 3MCCh. 1 - Prob. 4MCCh. 1 - Prob. 5MCCh. 1 - Prob. 1QCh. 1 - Prob. 2QCh. 1 - Prob. 3QCh. 1 - Prob. 4QCh. 1 - Prob. 5Q
Ch. 1 - Prob. 6QCh. 1 - Prob. 7QCh. 1 - Prob. 8QCh. 1 - Prob. 9QCh. 1 - Prob. 10QCh. 1 - Prob. 11QCh. 1 - Prob. 12QCh. 1 - Prob. 13QCh. 1 - Prob. 14QCh. 1 - Prob. 15QCh. 1 - Prob. 16QCh. 1 - Prob. 17QCh. 1 - Prob. 18QCh. 1 - Prob. 19MECh. 1 - Prob. 20MECh. 1 - Prob. 21MECh. 1 - Prob. 24MECh. 1 - Prob. 25MECh. 1 - Prob. 26MECh. 1 - Prob. 27ECh. 1 - Prob. 28ECh. 1 - Prob. 29ECh. 1 - Prob. 30ECh. 1 - Prob. 31ECh. 1 - Prob. 32ECh. 1 - Prob. 33ECh. 1 - Prob. 34ECh. 1 - Prob. 35ECh. 1 - Prob. 36PCh. 1 - Prob. 37PCh. 1 - Prob. 38PCh. 1 - Prob. 39PCh. 1 - Prob. 40PCh. 1 - Prob. 41PCh. 1 - Prob. 42PCh. 1 - Prob. 43PCh. 1 - Prob. 44PCh. 1 - Prob. 45PCh. 1 - Prob. 46CPCh. 1 - Prob. 47CPCh. 1 - Prob. 48CPCh. 1 - Prob. 49CPCh. 1 - Prob. 50CP
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