International Financial Statement Analysis 3rd Edition Thomas R. Robinson, Elaine Henry, Wendy L. Pirie - Solutions

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Computing and Interpreting Return on Assets and Its Components Tesco PLC, which is one of the world’s largest retailers and is headquartered in Cheshunt, U.K., reported the following balance sheet and income statement data for 2014 through 2016.£ millions Total Assets Net Income Sales 201???? .
Computing Return on Equity and Return on Assets The following table contains financial statement information for AstraZeneca, which is a global biopharmaceutical company focused on discovery, development, manufacturing, and commercialization of medicines and is headquartered in London.$ millions
Applying the Accounting Equation and Computing Financing Proportions The following table contains fiscal 2015 information for three companies that use IFRS. Apply the accounting equation to compute the missing financial amounts (a), (b), and (c). Which of these companies is more owner-financed?
Computing, Analyzing, and Interpreting Return on Equity Canadian Tire Corporation, Limited operates retail stores in Canada that sell general merchandise, clothing, and sporting goods. Total stockholders’ equity for Canadian Tire (in millions of Canadian dollars)is $4,994.2 in 2015 and $4,855.5
Disaggregating Return on Assets over Multiple Periods Following are selected financial statement data from 3M Company for 2012 through 2015.$ millions Total Assets Net Income Sales 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $33,876 $4,444 $29,904 2013 .
Computing and Interpreting Return on Assets and Its Components McDonald’s Corporation (MCD) reported the following balance sheet and income statement data for 2013 through 2015.$ millions Total Assets Net Income Sales 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Comparing Abercrombie & Fitch and TJX Companies Following are selected financial statement data from Abercrombie & Fitch (ANF—upscale clothing retailer) and TJX Companies (TJX—value-priced clothing retailer, including TJ Maxx).$ thousands Company Total Assets Net Income Sales 2015 . . . . . . .
Computing, Analyzing, and Interpreting Return on Equity and Return on Assets Following are summary financial statement data for Nordstrom Inc. for fiscal years ended 2014 through 2016.$ millions 2016 2015 2014 Sales. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Computing, Analyzing, and Interpreting Return on Equity and Return on Assets Following are summary financial statement data for Medtronic, plc for 2014 through 2016.$ millions 2016 2015 2014 Sales. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $28,833 $ 20,261 $17,005 Net
Formulating a Statement of Stockholders’ Equity from Raw Data Winnebago Industries Inc. reports the following selected information in its 2016 Form 10-K($ thousands).Contributed capital, August 29, 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 57,906 Treasury stock,
Formulating a Statement of Stockholders’ Equity from Raw Data Crocker Corporation began calendar-year 2016 with stockholders’ equity of $150,000, consisting of contributed capital of $120,000 and retained earnings of $30,000. During 2016, it issued additional stock for total cash proceeds of
Formulating Financial Statements from Raw Data Following is selected financial information from Cisco Systems Inc. for the year ended July 30, 2016($ millions).Cash, ending year . . . . . . . . . . . . . . . . $ 7,631 Total liabilities . . . . . . . . . . . . . . . . . . $ 58,067 Cash from
Formulating Financial Statements from Raw Data Following is selected financial information from Abercrombie & Fitch for its fiscal year ended January 30, 2016 ($ thousands).Noncash assets . . . . . . . . . . . . . . $1,844,461 Cash from operating activities . . . . $ 309,941 Cash from investing
Formulating Financial Statements from Raw Data Following is selected financial information from General Mills Inc. for its fiscal year ended May 29, 2016 ($ millions).Revenue . . . . . . . . . . . . . . . . . . . . . . $16,563.1 Cost of goods sold. . . . . . . . . . . . . . . . $10,733.6 Cash,
Computing Return on Equity and Return on Assets The following table contains financial statement information for Walmart Stores Inc.$ millions Total Assets Net Income Sales Equity 2015 . . . . . . . . . . . . . . . . . . . . . . . $199,581 $14,694 $478,614 $80,546 2014 . . . . . . . . . . . . . . .
Computing Return on Equity Starbucks reports net income for 2015 of $2,757.4 million. Its stockholders’ equity is $5,272 million and $5,818 million for 2014 and 2015, respectively.a. Compute its return on equity for 2015.b. Starbucks repurchased over $1.4 billion of its common stock in 2015. How
Assessing the Role of Financial Statements in Society Financial statement information plays an important role in modern society and business.a. Identify two or more external stakeholders who are interested in a company’s financial statements and what their particular interests are.b. What are
Computing Return on Assets and Applying the Accounting Equation Nordstrom Inc. reports net income of $600 million for its fiscal year ended January 2016. At the beginning of that fiscal year, Nordstrom had $9,245 million in total assets. By fiscal year ended January 2016, total assets had decreased
Computing and Interpreting Financial Statement Ratios Following are selected ratios of Colgate-Palmolive for 2015 and 2014.Return on Assets (ROA) Component 2015 2014 Profitability (Net income/Sales) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.60% 12.60%Productivity (Sales/Average
Applying Financial Statement Relations to Compute Dividends Colgate-Palmolive reports the following dollar balances in its retained earnings account.$ millions 2015 2014 Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . $18,861 $18,832 During 2015, Colgate-Palmolive reported net
Specifying Financial Information Users and Uses Financial statements have a wide audience of interested stakeholders. Identify two or more financial statement users who are external to the company. For each user on your list, specify two questions that could be addressed with financial statement
Applying the Accounting Equation and Assessing Financial Statement Linkages Answer the following questions. (????int: Apply the accounting equation.)a. Intel had assets equal to $103,065 million and liabilities equal to $41,980 million for a recent yearend.What was Intel’s total equity at
Composition of Accounts on the Balance Sheet Answer the following questions about the Target balance sheet.a. Briefly describe the types of assets Target is likely to include in its inventory.b. What kinds of assets would Target likely include in its property and equipment?c. Target reports about
Assessing Controlling and Non-Controlling Interest Mondelez International, Inc., reported the following in its December 2015 income statement($ millions).Net earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $7,291 Noncontrolling interest . . . . . . . .
AAccessing SEC reports and Calculating Ratios Access the 2015 financial reports at the SEC website for Pfizer Inc. and Merck & Co., two close competitors in the pharmaceutical industry.a. Use data from the companies’ balance sheets and income statements to complete the following table.$ millions
Assessing the Competitive Environment For each of the following companies, briefly explain what type of competitive advantage(s) they have, if any. Select from: barriers to entry, product differentiation, cost leader, or buyer power.a. Applec. Pfizere. American Airlines ????. McDonald’sb.
Identifying Ethical Issues and Accounting Choices Assume you are a technology services provider and you must decide on whether to record revenue from the installation of computer software for one of your clients. Your contract calls for acceptance of the software by the client within six months of
Identifying Financial Statement Line Items and Accounts Several line items and account titles are listed below. For each, indicate in which of the following financial statement(s) we would likely find the item or account: income statement (IS), balance sheet (BS), statement of stockholders’
AVerifying Linkages Between Financial Statements Access the 2015 10-K for DuPont at the SEC’s database of financial reports (www.sec.gov). Using its December 31, 2015, consolidated statement of stockholders’ equity, prepare a table to reconcile the opening and ending balances of its retained
AIdentifying Key Numbers from Financial Statements Access the September 25, 2015, 10-K for Starbucks Corporation at the SEC’s database for financial reports (www.sec.gov).Requireda. What did Starbucks report for total assets, liabilities, and equity at September 25, 2015? Confirm the accounting
Applying the Accounting Equation and Computing Financing Proportions Use the accounting equation to compute the missing financial amounts (a), (b), and (c). Which of these companies is more owner-financed? Which of these companies is more nonowner-financed? Discuss why the proportion of owner
Relating Financing and Investing Activities In a recent year, the total assets of Best Buy equal $13,519 million, and its liabilities equal $9,141 million.Requireda. What is the amount of Best Buy’s equity?b. Does Best Buy receive more financing from its owners or nonowners?c. What percentage of
Relating Financing and Investing Activities In a recent year, the total assets of Microsoft Corporation equal $193,694 million, and its equity is$71,997 million.Requireda. What is the amount of its liabilities?b. Does Microsoft receive more financing from its owners or nonowners?c. What percentage
Understanding What Information Financial Statement Users Demand Match each of the financial statement users listed to the question they are most likely to ask.Financial Statement User Questions A. Current shareholders 1. What is the expected net income for next quarter?B. Company CEO 2. Will the
Understanding How the Four Business Activities Are Related In its January 2016 press release, AT&T revealed that CAPEX for fiscal 2016 (capital expenditures for additional property, plant and equipment) was expected to be in the $22 billion range. How will this planned expenditure affect the other
One of Buffett’s acquisition criteria is to invest in businesses “earning good return on equity while employing little or no debt.” Why is Buffett concerned about debt?
One of Warren Buffett’s acquisition criteria is to invest in businesses “earning good return on equity.”The ROE formula uses both net income and stockholders’ equity. Why is it important to relate net income to stockholders’ equity? Why isn’t it sufficient to merely concentrate on
In 2016, Oracle Corporation reported consolidated net income of $9,017 million, yet it only included$8,901 million in retained earnings. Explain why this happened.
True or false: A parent company owns 80% of its subsidiary’s stock. Because the parent has controlling interest in the subsidiary company, the parent includes 80% of the subsidiaries revenue and expenses(line by line) in the consolidated income statement.
Explain what is meant by “non-controlling interest.”
Business decision makers external to the company increasingly demand more financial information from the company. Discuss the reasons why companies have traditionally opposed the efforts of regulatory agencies like the SEC to require more disclosure.
AAccess the 2015 10-K for Procter & Gamble at the SEC’s database of financial reports (www.sec.gov). Who is P&G’s auditor? What specific language does the auditor use in expressing its opinion, and what responsibilities does it assume?
What are the components of a SWOT analysis? For each component, indicate whether it is an internal or external environmental factor.
What are the five important forces that confront the company and determine its competitive intensity?
Companies prepare four primary financial statements. What are those financial statements, and what information is typically conveyed by each?
The accounting equation (Assets ???? Liabilities 1 Equity) is a fundamental business concept. Explain what this equation reveals about a company’s sources and uses of funds and the claims on company resources.
Firms engage in four basic types of activities. List the activities. Describe how financial statements can provide useful information for each activity. How can subsequent financial statements be used to evaluate the success of each of the activities?
Th e estimate of PDQ’s solo value is crude because of:A . the potential diff erences in accounting standards used by PDQ and Astana.B . the diff ering risk characteristics of PDQ and Astana.C . diff erences in liquidity and market effi ciency where PDQ and Astana trade.
Th e adjusted fi nancial statements were created during which phase of the fi nancial analysis process?A . Data collection.B . Data processing.C . Data interpretation.
On a “solo” basis, PDQ’s P/E ratio is closest to:A . 19.6.B . 21.0.C . 24.5.
How much of PDQ’s value can be explained by its equity stake in Astana?A . 6.5%.B . 10.6%.C . 20.0%.
Had the securitized fi nance receivables been held on the balance sheet, Software Services’ratio of liabilities to total capital would have been closest to:A . 73.0%.B . 74.8%.C . 80.4%.
Compared to holding securitized fi nance receivables on the balance sheet, treating them as sold had the eff ect of reducing Software Services’ reported fi nancial leverage by:A . 6.8%.B . 7.4%.C . 9.2%.
Based on the ratios for operating cash fl ow before interest and taxes to operating income, Abay should conclude that:A . Bickchip’s earnings are backed by cash fl ow.B . Bickchip’s earnings are not backed by cash fl ow.C . Abay can draw no conclusion due to the changes in the ratios over time.
Th e ratio of operating cash fl ow before interest and taxes to operating income for Bickchip for 2009 is closest to:A . 1.6.B . 1.9.C . 2.1.
Th e cash-fl ow-based accruals ratios from 2007 to 2009 indicate:A . improving earnings quality.B . deteriorating earnings quality.C . no change in earnings quality.
Bickchip’s cash-fl ow-based accruals ratio in 2009 is closest to:A . 9.9%.B . 13.4%.C . 23.3%.
Based on Abay’s criteria, the business segment best suited for divestiture is:A . medical equipment.B . power and industrial.C . automation equipment.
Based on the DuPont analysis, Abay’s belief regarding ROE is most likely based on:A . leverage.B . profi t margins.C . asset turnover.
Over the three-year period presented in Exhibit 1, Bickchip’s return on equity is best described as:A . stable.B . trending lower.C . trending higher.
Excluding the investments in associates would result in the interest coverage ratio for Colorful Concepts being:A . lower.B . higher.C . the same.
Ignoring the impact of any accounting change, the asset turnover ratio for Colorful Concepts excluding the investments in associates would:A . stay the same.B . increase by 0.10.C . decrease by 0.10.
Ignoring the potential impact of any accounting change and excluding the investment in associates, the net profi t margin for Colorful Concepts would be closest to:A . 6.0%.B . 7.2%.C . 7.5%.
Based on Leenid’s analysis of the results of the initial screening, relative to Colorful Concepts the bond rating of Silk Road should be:A . lower.B . higher.C . the same.
Will the change in accounting rules impact the result of the initial screening process for Colorful Concepts?A . It passes the screens now, but will not pass if the accounting rules change.B . It passes the screens now and will continue to pass if the accounting rules change.C . It fails the
If the accounting rules were to change, Silk Road’s fi nancial leverage ratio would be closest to:A . 1.37.B . 1.79.C . 2.92.
If the accounting rules were to change, Silk Road’s interest coverage ratio would be closest to:A . 3.03.B . 3.50.C . 5.04.
If the accounting rules were to change, Silk Road’s assets would increase by approximately:A . 1,297.B . 1,576.C . 1,704.
What will be the impact on Stellar in the current year if Martinez’s belief in Conclusion 4 is correct? Compared with the previous year, Stellar’s:A . current ratio will increase.B . days sales outstanding (DSO) will decrease.C . accounts receivable turnover will decrease.
In his follow-up analysis relating to Conclusion 3, Martinez should focus on Stellar’s:A . total accruals.B . discretionary accruals.C . non-discretionary accruals.
Based on Conclusion 2, after the acquisition of Solar, Stellar’s earnings are most likely :A . understated.B . fairly stated.C . overstated.
Based on Martinez’s conclusions, Stellar’s fi nancial statements are best categorized as:A . non-GAAP compliant.B . GAAP compliant, but with earnings management.C . GAAP compliant and decision useful, with sustainable and adequate returns.
If Acceletron’s fi nancial statements are translated into US dollars using the temporal method, Redline’s consolidated fi nancial statements will most likely include Acceletron’s:A . USD336 million in inventory.B . USD956 million in fi xed assets.C . USD152 million in accounts receivable.
If the current rate method is used to translate Acceletron’s fi nancial statements into US dollars, Redline’s consolidated fi nancial statements will most likely include Acceletron’s:A . USD3,178 million in revenues.B . USD118 million in long-term debt.C . negative translation adjustment to
Redline’s consolidated gross profi t margin for 2007 would be highest if Acceletron accounted for inventory using:A . FIFO, and its functional currency were the US dollar.B . LIFO, and its functional currency were the US dollar.C . FIFO, and its functional currency were the Singapore dollar.
If the US dollar were chosen as the functional currency for Acceletron in 2007, Redline could reduce its balance sheet exposure to exchange rates by:A . selling SGD30 million of fi xed assets for cash.B . issuing SGD30 million of long-term debt to buy fi xed assets.C . issuing SGD30 million in
Compared with using the Singapore dollar as Acceletron’s functional currency for 2007, if the US dollar were the functional currency, it is most likely that Redline’s consolidated:A . inventories will be higher.B . receivable turnover will be lower.C . fi xed asset turnover will be higher.
Relative to the gross margins the subsidiaries report in local currency, Romulus’s consolidated gross margin most likely :A . will not be distorted by currency translations.B . would be distorted if Augustus were using the same translation method as Julius.C . will be distorted because of the
When Marks converts his forecasted income statement data for Julius into US dollars, the 20X2 gross profi t margin will be closest to:A . 39.1%.B . 40.9%.C . 44.6%.
When Marks translates his forecasted balance sheet for Julius into US dollars, total assets as of 31 December 20X2 (dollars in millions) will be closest to:A . $1,429.B . $2,392.C . $3,703.
When Romulus consolidates the results of Julius, any unrealized exchange rate holding gains on monetary assets should be:A . reported as part of operating income.B . reported as a non-operating item on the income statement.C . reported directly to equity as part of the cumulative translation
To account for its foreign operations, Romulus has most likely designated the euro as the functional currency for:A . Julius only.B . Augustus only.C . both Julius and Augustus.
Based on the translation method being used for Julius, the subsidiary is most likely:A . a sales outlet for Romulus’s products.B . a self-contained, independent operating entity.C . using the US dollar as its functional currency.
In response to the board’s fi rst question, Templeton would most likely reply that such a change would be justifi ed if:A . the infl ation rate in the United States became hyperinfl ationary.B . management wanted to fl ow more of the gains through net income.C . Consol-Can were making autonomous
After translating Consol-Can’s 31 December 20X2 balance sheet into the parent company’s currency (US$), the translated value of retained earnings will be closest to:A . $41 million.B . $44 million.C . $46 million.
After translating Consol-Can’s inventory and long-term debt into the parent company’s currency (US$), the amounts reported on Consolidated Motor’s fi nancial statements on 31 December 20X2 would be closest to (in millions):A . $71 for inventory and $161 for long-term debt.B . $71 for
Based on the information available and Ruiz’s expectations regarding exchange rates, if the hryvnia is chosen as the Ukraine subsidiary’s functional currency, Eurexim will most likely report:A . an addition to the cumulative translation adjustment.B . a translation gain or loss as a component
If the hryvnia is chosen as the Ukraine subsidiary’s functional currency, Eurexim will translate its inventory using the:A . average rate for the reporting period.B . rate in eff ect at the end of the reporting period.C . rate in eff ect at the time the inventory was purchased.
If the euro is chosen as the Ukraine subsidiary’s functional currency, Eurexim will translate its accounts receivable using the:A . rate in eff ect at the transaction date.B . average rate for the reporting period.C . rate in eff ect at the end of the reporting period.
If the euro is chosen as the Ukraine subsidiary’s functional currency, Eurexim will translate its fi xed assets using the:A . average rate for the reporting period.B . rate in eff ect when the assets were purchased.C . rate in eff ect at the end of the reporting period.
Given Ruiz’s belief about the direction of exchange rates, Eurexim’s gross profi t margin would be highest if it accounts for the Ukraine subsidiary’s inventory using:A . FIFO and the temporal method.B . FIFO and the current rate method.C . weighted-average cost and the temporal method.
If Ukraine’s economy becomes highly infl ationary, Eurexim will most likely translate inventory by:A . restating for infl ation and using the temporal method.B . restating for infl ation and using the current exchange rate.C . using the temporal method with no restatement for infl ation.
Based on Byron’s forecast, NinMount’s 2009 total asset turnover ratio on beginning assets under the equity method is most likely :A . lower than if the results are reported using consolidation.B . the same as if the results are reported using consolidation.C . higher than if the results are
Based on Byron’s forecast, NinMount’s 2009 return on beginning equity most likely will be the same under:A . either of the consolidations, but diff erent under the equity method.B . the equity method, consolidation with full goodwill, and consolidation with partial goodwill.C . none of the
Based on Byron’s forecast, NinMount’s net profi t margin for 2009 most likely will be highest if the results of the acquisition are reported using:A . the equity method.B . consolidation with full goodwill.C . consolidation with partial goodwill.
Based on Byron’s forecast, if NinMount deems it has acquired control of Boswell, NinMount’s consolidated 2009 depreciation and amortization expense (in £ millions) will be closest to:A . 102.B . 148.C . 204.
NinMount’s long-term debt to equity ratio on 31 December 2008 most likely will be lowest if the results of the acquisition are reported using:A . the equity method.B . consolidation with full goodwill.C . consolidation with partial goodwill.
NinMount’s current ratio on 31 December 2008 most likely will be highest if the results of the acquisition are reported using:A . the equity method.B . consolidation with full goodwill.C . consolidation with partial goodwill.
If Supreme Healthcare sells its receivables to the SPE, its consolidated fi nancial results will most likely show:A . a higher revenue for 2010.B . the same cash balance at 31 December 2010.C . the same accounts receivable balance at 31 December 2010.
Based on Ohalin’s estimates, the amount of joint venture shareholders’ equity at 31 December 2010 included on the consolidated fi nancial statements of each venturer will most likely be:A . higher for BetterCare.B . higher for Supreme Healthcare.C . the same for both BetterCare and Supreme

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International Financial Statement Analysis 3rd Edition Thomas R. Robinson, Elaine Henry, Wendy L. Pirie - Solutions

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