Financial Reporting, Financial Statement Analysis and Valuation
8th Edition
ISBN: 9781285190907
Author: James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher: Cengage Learning
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Textbook Question
Chapter 4, Problem 19PC
Texas Instruments (TI) designs and manufactures semiconductor products for use in computers, telecommunications equipment, automobiles, and other electronics-based products. The manufacturing of semiconductors is highly capital-intensive. Hewlett-Packard Corporation (HP) manufactures computer hardware and various imaging products, such as printers and fax machines. Exhibit 4.26 presents selected data for TI and HP for three recent years.
Exhibit 4.25
Exhibit 4.26
REQUIRED
- a. Compute the fixed assets turnover for each firm for Years 1, 2, and 3.
- b. Suggest reasons for the differences in the fixed assets turnovers of TI and HP.
- c. Suggest reasons for the changes in the fixed assets turnovers of TI and HP during the three-year period.
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Students have asked these similar questions
Texas Instruments (TI) designs and manufactures semiconductor products for use
in computers, telecommunications equipment, automobiles, and other electronics-
based products. The manufacturing of semiconductors is highly capital-intensive.
Hewlett-Packard Corporation (HP) manufactures computer hardware and various
imaging products, such as printers and fax machines. Exhibit 4.25 presents selected
data for TI and HP for three recent years.
Exhibit 4.25 Selected Data for Texas Instruments and Hewlett-Packard
(Amounts in Millions) (Problem 4.19)
Texas Instruments
Sales
Cost of goods sold
Capital expenditures
Average fixed assets
Percentage fixed assets depreciated
Percentage change in sales
Hewlett-Packard
Sales
Cost of goods sold
Capital expenditures
Average fixed assets
Percentage fixed assets depreciated
Percentage change in sales
Required
Year 3
$ 12,501
6,256
763
3,457
54.9%
(9.6)%
$114,552
86,351
3,695
11,050
74.7%
(3.2)%
Year 2
$ 13,835
5,432
686
3,780
52.3%
(3.0)%
$118,364
87,065…
Required information
[The following information applies to the questions displayed below.]
Megamart provides the following information on its two investment centers.
Investment Center
Electronics
Income
$ 3,114,000
2,261,000
Average Assets
$ 17,300,000
13,300,000
Sporting goods
Sales
$ 41,520,000
18,088,000
1. Compute return on investment for each center. Using return on investment, which center is most efficient at using assets to generate
income?
2. Assume a target income of 11% of average assets. Compute residual income for each center. Which center generated the most
residual income?
3. Assume the Electronics center is presented with a new investment opportunity that will yield a 14% return on investment. Should the
new investment opportunity be accepted? The target return is 11%.
Complete this question by entering your answers in the tabs below.
Required 1 Required 2 Required 3
Compute return on investment for each center. Using return on investment, which center is most efficient…
Required Information
[The following Information applies to the questions displayed below.]
Megamart provides the following Information on its two Investment centers.
Investment Center
Electronics
Sporting goods
Sales
$ 63,460,000
19,050,000
1. Compute return on Investment for each center. Using return on investment, which center is most efficient at using assets to
generate Income?
2. Assume a target Income of 12% of average assets. Compute residual income for each center. Which center generated the most
residual Income?
3. Assume the Electronics center is presented with a new Investment opportunity that will yield a 14% return on Investment. Should
the new Investment opportunity be accepted? The target return is 12%.
Complete this question by entering your answers in the tabs below.
Numerator:
Required 1 Required 2 Required 3
Compute return on investment for each center. Using return on investment, which center is most efficient at using assets to
generate income?
Income
$ 3,173,000…
Chapter 4 Solutions
Financial Reporting, Financial Statement Analysis and Valuation
Ch. 4 - Common-Size Analysis. Common-size analysis is a...Ch. 4 - Earnings per Share. Firm A reports an increase in...Ch. 4 - Prob. 3QECh. 4 - Profit Margin for ROA versus ROCE. Describe the...Ch. 4 - Concept and Measurement of Financial Leverage....Ch. 4 - Advantages of Financial Leverage. A company...Ch. 4 - Prob. 7QECh. 4 - Nucor, a steel manufacturer, reported net income...Ch. 4 - Phillips-Van Heusen, an apparel manufacturer,...Ch. 4 - TJX, Inc., an apparel retailer, reported net...
Ch. 4 - Boston Scientific, a medical device manufacturer,...Ch. 4 - Valero Energy, a petroleum company, reported net...Ch. 4 - Exhibit 4.22 presents selected operating data for...Ch. 4 - Microsoft Corporation (Microsoft) and Oracle...Ch. 4 - Prob. 17PCCh. 4 - Prob. 18PCCh. 4 - Texas Instruments (TI) designs and manufactures...Ch. 4 - JCPenney operates a chain of retail department...Ch. 4 - Prob. 21PCCh. 4 - Selected data for General Mills for 2007, 2008,...Ch. 4 - Prob. 23PCCh. 4 - Hasbro is a leading firm in the toy, game, and...Ch. 4 - Fitch sells casual apparel and personal care...Ch. 4 - Prob. 26PCCh. 4 - Starwood Hotels (Starwood) owns and operates many...Ch. 4 - Select data for Avis and Hertz for 2012 follow....Ch. 4 - Integrative Case 1.1 introduced the industry...Ch. 4 - Prob. 1ABICCh. 4 - Prob. 1ACICCh. 4 - Prob. 1BAICCh. 4 - Prob. 1BBICCh. 4 - Walmart and Carrefour follow similar strategies....Ch. 4 - Walmart and Carrefour follow similar strategies....
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