Accounting Question

Description

Name the four categories of financial statement analysis ratios:
_______________________________________________________________

Inventory turnover is which type of financial statement analysis ratio:

________________________________________________________________

3. ROI, ROE, and P/E Ratios are measures of what? ________________________

4. Working Capital and Current Ratio are measures of what? __________________

5. Return on Investment (ROI) is sometimes referred to as what? _______________

6. The excess of a firmænbsp;current assets over its current liabilities is called which ratio? ___________________________________________________________________

7. Financial statements of companies that are publicly traded must be audited by who?

____________________________________________________________________

8. Excluding the Statement of Comprehensive Income, what is the typical sequence of the four main financial statements in an annual report? ______________________________________________________________________

9. Annual reports often include a section called the ____________________________ , in addition to the financial statements and notes. This section describes the firmænbsp;activities for the year, including comments about its financial condition and results of operations.

10. Using Campbell Soup Companyænbsp;FYE 2017 Annual Report in the Appendix of your textbook, answer the following questions (YOU MUST SHOW YOUR OWN WORK):

A) What were the net sales for 2021? _____________________________

B) What was the cost of goods (products) sold for 2021? ______________________

C) What was the gross profit (margin) for 2021? _____________________

D) What was the gross profit (margin) ratio for 2021? _________________

E) What were the retained earnings as of 8/3/21? ___________________

F) What was the current ratio as of 8/3/21? ________________________

G) What was the ROI for 2021? __________________________________

H) What was the cash flow provided by operating activities for 2021? _______________

I) What was the cash flow used in investing activities for 2021? ____________________

J) What was the cash flow used in financing activities for 2021? ____________________

K) How much did the company pay in dividends during 2021? ______________________

L) How many shares of common stock were outstanding as of 8/3/21? ______________

M) What depreciation method does Campbell Soup Company use? __________________

N) Which inventory valuation method do they use? _______________________________

O) Who is their independent accounting firm (auditors)? ___________________________

P) Who is their president and CEO as of 2017, as listed in the annual report? __________________________________________________________________

1 attachments

Slide 1 of 1

attachment_1

attachment_1

Unformatted Attachment Preview

Chapters 3, 10 & 11
Fundamental Interpretations Made
from Financial Statement Data,
Financial Statement Analysis, &
Notes to the Financial Statements
McGraw-Hill/Irwin
Copyright 2014 by The McGraw-Hill Companies, Inc. All rights reserved.
22
LO 1
Financial Ratios & Trend
Analysis
Trend analysis compares a single
observation over several years. The
more data (years) available, the
more meaningful & useful the
analysis is.
McGraw-Hill/Irwin
3-2
2008 The McGraw-Hill Companies, Inc., All Rights Reserved.
23
Rate of Return
LO 2
Rate of
=
return
Amount of return
Amount of investment
This ratio provides the return on a given
investment alternative. All other things
being equal, the higher the rate of return,
the more profitable the alternative.
Higher rates of return are associated with greater risk!
The wider range of possible outcomes, the greater the
risk.
Investing in a savings account = little return, little risk.
Investing in stock market = wide range of possible
outcomes (make a fortune, or lose it all), so higher risk.
McGraw-Hill/Irwin
3-3
2008 The McGraw-Hill Companies, Inc., All Rights Reserved.
24
LO 2
Return on Investment (R.O.I.)
Return on
=
investment
Net income
Average total assets
Avg Total Assets = ($364,720 + $402,654) / 2
Avg Total Assets = $383,687
Net income = $34,910
ROI = $34,910 / $383,687
ROI = 9.1%
A rule of thumb useful for putting ROI in
perspective is that average ROI, based on net
income, for most American merchandising and
manufacturing companies is between 8% – 12%.
McGraw-Hill/Irwin
3-4
2008 The McGraw-Hill Companies, Inc., All Rights Reserved.
25
LO 3
ROI – The DuPont Model
Return on
Net income
=
investment
Sales
Sales
àAverage total assets
Margin
Turnover
Margin = Net income $34,910 / Sales $611,873
= 5.7%
Turnover = Sales $611,873 / Avg Total Assets $383,687
= 1.6
ROI = 5.7% x 1.6
ROI = 9.1%
McGraw-Hill/Irwin
3-5
2008 The McGraw-Hill Companies, Inc., All Rights Reserved.
26
LO 4
Return on Equity (R.O.E.)
Return on
=
equity
Net income
Average stockholders’ equity
Avg Stkhldrs quity = ($230,320 + $265,230) / 2
= $247,775
Net income = $34,910
ROE = $34,910 / $247,775
ROE = 14.4%
As a rule of thumb, average ROE for most American
merchandising and manufacturing companies has
historically ranged from 12% to 18%.
McGraw-Hill/Irwin
3-6
2008 The McGraw-Hill Companies, Inc., All Rights Reserved.
27
Categories of F/S Ratios
? Liquidity Measures (ST assets & liabs)
? Firmàability to meet current obligations
? Activity Measures (turnover)
? Efficient use of firmàassets to generate sales
? Profitability Measures (ROI & ROE)
? Relates net income to balance sheet accts
? Financial Leverage Measures (debt/equity)
? Use of debt to finance firmàassets
McGraw-Hill/Irwin
7
2008 The McGraw-Hill Companies, Inc., All Rights Reserved.
28
Liquidity Measures
** See List of Ratios for calculations
? Working capital
? Current ratio
? Acid-test ratio
McGraw-Hill/Irwin
8
2008 The McGraw-Hill Companies, Inc., All Rights Reserved.
29
Activity Measures
? Total Asset Turnover
? Accounts Receivable Turnover
? Inventory Turnover
? Plant & Equipment Turnover
? Number of Days ales in Accts Rec
? Number of Days ales in Inventory
McGraw-Hill/Irwin
9
2008 The McGraw-Hill Companies, Inc., All Rights Reserved.
210
Profitability Measures
? Return on Investment (ROI)
? Return on Equity (ROE)
? Price/Earnings Ratio (P/E Ratio)
? Dividend Yield
? Dividend Payout Ratio
? Preferred Dividend Coverage Ratio
McGraw-Hill/Irwin
10
2008 The McGraw-Hill Companies, Inc., All Rights Reserved.
211
Financial Leverage Measures
? Debt Ratio
? Debt / Equity Ratio
? Times Interest Earned
McGraw-Hill/Irwin
11
2008 The McGraw-Hill Companies, Inc., All Rights Reserved.
212
Annual Report
? See Campbell Soup Company 0. 640
? MD&A (MgmtàDiscussion & Analysis)
? Letters from chairman of board, CEO
? Form 10-K
? Key performance indicators (KPIé
? Financial Statements & Notes 0. 650-4
? ManagementàReports 0. 693
? AuditoràReport 0. 695
McGraw-Hill/Irwin
12
2008 The McGraw-Hill Companies, Inc., All Rights Reserved.
213
Notes to the Financial Stmts.
? Integral part of Financial Statements
? Contain important disclosures not listed in
actual financial statements (f/s)
? Usually listed behind the f/s; part of audit
? Include égnificant Accounting Policies
details on certain accounts, accounting
changes, estimates, contingencies, etc.
? See Campbell Soup Co. Notes 0. 655
McGraw-Hill/Irwin
13
2008 The McGraw-Hill Companies, Inc., All Rights Reserved.
214
*End of Chapter Review*
See List of Ratios
McGraw-Hill/Irwin
14
2008 The McGraw-Hill Companies, Inc., All Rights Reserved.

Purchase answer to see full
attachment

User generated content is uploaded by users for the purposes of learning and should be used following Studypool’s honor code & terms of service.



^{Have a similar assignment? "Place an order for your assignment and have exceptional work written by our team of experts, guaranteeing you A results."}