The Following Balance Sheets and Income Statements Are for Net

question 58

Essay

The following balance sheets and income statements are for Net Devices Inc., a manufacturer of small electronic devices, including calculators, personal digital assistants and mp3 players. Use the information to calculate the following information:
a. Compute the rate of return on assets for Net Devices for both 2011 and 2010. Disaggregate the rate of return on assets into the profit margin on ROA and asset turnover components. The income tax rate is 35%.
b. Calculate the accounts receivable turnover ratio for Net Devices for 2011 and 2010. All of the company’s sales were made on account.
c. Calculate the inventory turnover ratio for Net Devices for 2011 and 2010.
d. Calculate the fixed assets turnover ratio for Net Devices for 2011 and 2010.
e. Calculate the rate of return on common shareholders’ equity for Net Devices for 2011 and 2010. The amount of preferred dividends paid each year appear after the income statement. Calculate profit margin for ROCE.
f. Determine Net Devices capital structure leverage for 2011 and 2010.
g. Calculate Net Devices earnings per share for 2011 and 2010.

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Definitions:

Probability Value

A numerical measure between 0 and 1, inclusive, that represents the likelihood of a specific event happening.

Forecast Chart

A visual representation of past and predicted future data trends, often used for analysis and planning in various fields.

Forecast Cells

Segments or units within a forecasting model representing specific future outcomes based on variables and conditions.

Output Variables

In modeling and simulations, these are the responses or results that are generated as a consequence of changing input variables.