Research in Motion Limited (RIM) is not well known, but it produces a wellknown product: the Blackberry
Question:
Research in Motion Limited (RIM) is not well known, but it produces a wellknown product: the Blackberry mobile phone. Information for 2008 and 2007 from the company’s annual report appears at the top of the next page.18 (All numbers are in thousands.) Three students who were looking at RIM’s annual report were overheard making the following comments: Student A: What a great year RIM had in 2008! The company earned income of $2,422,238 because its total assets increased from $3,088,949 to $5,511,187. Student B: But the company didn’t do that well because the change in total assets isn’t the same as net income! The company had a net income of only $507,254 because its cash increased from $677,144 to $1,184,398. Student C: I see that retained earnings went from $359,227 to $1,653,094. Don’t you have to take that into consideration when analyzing the company’s performance?
1. Comment on the interpretations of Students A and B, and then answer Student C’s question.
2. Estimate RIM’s net income for 2008. (Note: RIM did not pay any cash dividends.)
Step by Step Answer:
Financial and Managerial Accounting
ISBN: 978-1439037805
9th edition
Authors: Belverd E. Needles, Marian Powers, Susan V. Crosson