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The Following Balance Sheets and Income Statements Are for Net

question 23

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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 appears 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.
ASSETS (in thousands)
 Fiscal year end 201120102009 Cash $875,650$571,250$154,230 Marketable securities 6,56000 Receivables 771,580775,250902,000 Inventories 1,320,1501,254,6001,418,500 Other current assets 249,000231,200229,900 Total current assets 3,222,9402,832,3002,704,630 Property, plant & equipment 1,118,7501,100,3001,122,400 Intangibles 263,050241,000215,600 Deposits & other assets 184,500168,250168,900 Total assets $4.789.240$4.341.850$4.211.530\begin{array}{lrrr}\text { Fiscal year end }&2011 & 2010 & 2009\\\text { Cash } & \$ 875,650 & \$ 571,250 & \$ 154,230 \\\text { Marketable securities } & 6,560 & 0 & 0 \\\text { Receivables } & 771,580 & 775,250 & 902,000 \\\text { Inventories } & 1,320,150 & 1,254,600 & 1,418,500 \\\text { Other current assets } & 249,000 & 231,200 & 229,900\\\text { Total current assets }&3,222,940 & 2,832,300 &2,704,630\\\\\text { Property, plant \& equipment } & 1,118,750 & 1,100,300 & 1,122,400 \\\\\text { Intangibles } & 263,050 & 241,000 & 215,600 \\\text { Deposits \& other assets } & 184,500 & 168,250 & 168,900\\\text { Total assets }&\$ 4.789 .240 & \$ 4.341 .850& \$ 4.211 .530\end{array}

 LIABILITIES (in thousands) \text { LIABILITIES (in thousands) }
 Fiscal year end 201120102009 Accounts payable $1,178,540$1,061,100$1,138,250 Current long term debt 18,100316,500150,900 Accrued expenses 664,100615,900585,400 Income taxes payable 138,900108,40038,200 Other current liabilities 000 Total current liabilities 1,999,6402,101,9001,912,750 Long term debt 478,250378,400599,630 Other long term liabilitieg 13,35000 Total liabilities 2,491,2402,480,3002,512,380 Preferred stock 850,000850,000550,000 Common stock net 4,0003,9503,800 Additional Paid-in Capital 869,000758,000689,500\begin{array}{lrrr}\text { Fiscal year end } & 2011 & 2010 & \mathbf{2 0 0 9} \\\text { Accounts payable } & \$ 1,178,540 & \$ 1,061,100 & \$ 1,138,250 \\\text { Current long term debt } & 18,100 & 316,500 & 150,900 \\\text { Accrued expenses } & 664,100 & 615,900 & 585,400 \\\text { Income taxes payable } & 138,900 & 108,400 & 38,200 \\\text { Other current liabilities } & 0 & 0 & 0\\\text { Total current liabilities }&1,999,640 & 2,101,900 &1,912,750\\\\\text { Long term debt } & 478,250 & 378,400 & 599,630 \\\text { Other long term liabilitieg } & 13,350 & 0 & 0\\\text { Total liabilities }& 2,491,240 & 2,480,300 & 2,512,380\\\\\text { Preferred stock } & 850,000 & 850,000 & 550,000 \\\text { Common stock net } & 4,000 & 3,950 & 3,800 \\\text { Additional Paid-in Capital } & 869,000 & 758,000 & 689,500\end{array}
 Retained earnings 1,430,5001,055,0001,245,050 Treasury stock (855,500)(805,400)(789,200) Shareholders’ equity2,298,0001,861,5501,699,150 Total Liab, & Equity $4.789.240$4.341.850$4.211.530\begin{array}{lll}\text { Retained earnings }&1,430,500 & 1,055,000 & 1,245,050 \\\text { Treasury stock }&(855,500) & (805,400) & (789,200) \\\text { Shareholders' equity}& 2,298,000 & 1,861,550 & 1,699,150 \\\\\text { Total Liab, \& Equity }&\$ 4.789 .240&\$ 4.341 .850&\$ 4.211 .530 \\\end{array}


 INCOME STATEMENT (in thousands)  Fiscal year end 20112010 Net sales $11,455,500$11,082,100 Cost of Goods Sold (8,026,450)(7,940,065) Gross profit 3,429,0503,142,035 Selling, general & admin Exp. (1,836.400)(1,789,200) Income before deprec, & amort, 1,592,6501,352,835 Depreciation & amortization(785,250)(757,250) Intereat expense(46,195)(43.340) Income before tax 761,205552,245 Provision for income taxes (157,725)(112,290) Minority interest  Net income $603.480$439.955 ADDITIONAL INFORMATION  Outstanding shares 308,515,000303,095,000 Preferred Dividends–Total $85,000,000$85,000,000\begin{array}{lcc}\text { INCOME STATEMENT (in thousands) }\\\text { Fiscal year end } & 2011 & 2010 \\\text { Net sales } & \$ 11,455,500 & \$ 11,082,100 \\\text { Cost of Goods Sold } &(8,026,450)&(7,940,065) \\\text { Gross profit } & 3,429,050 & 3,142,035\\\\\text { Selling, general \& admin Exp. }&(1,836.400)&(1,789,200)\\\text { Income before deprec, \& amort, }&1,592,650 & 1,352,835\\\\\text { Depreciation \& amortization}&(785,250) & (757,250) \\\text { Intereat expense} &(46,195) & (43.340)\\\\\text { Income before tax } & 761,205 & 552,245 \\\text { Provision for income taxes } & (157,725) & (112,290) \\\text { Minority interest } & \ldots & \ldots \\\\\text { Net income }&\$603.480&\$ 439.955\\\\\text { ADDITIONAL INFORMATION }\\\text { Outstanding shares } & 308,515,000 & 303,095,000 \\\text { Preferred Dividends--Total } & \$ 85,000,000 & \$ 85,000,000\end{array}

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Definitions:

Resource Prices

The cost associated with acquiring the natural resources needed for production, such as minerals, timber, water, and land.

Output Increased

A situation where the production of goods or services in an economy rises.

Purely Competitive Market

A market structure characterized by a large number of small firms, a homogeneous product, free entry and exit, and perfect information, leading to firms being price takers.

Short Run

A time period in which at least one factor of production is fixed, limiting the ability of a firm to adjust its output.

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