Comparisons of income can be very difficult for two companies even though they sell the same...
Comparisons of income can be very difficult for two companies even though they sell the same products in equal volume. Why? Cite the names of the companies.
What is the difference between book value per share of common stock and market value per share? Why does this disparity occur? Cite an example from WSJ.
Polly Esther Dress Shops, Inc., can open a new store that will do an annual sales volume of $800,000. It will turn over its assets 3.5 times per year. The profit margin on sales will be 12 percent. What would net income and return on assets (investment) be for the year? Show all calculations.
Homework Answers
Comparisons of income can be very difficult for two companies even though they sell the same products in equal volume. Why? Cite the names of the companies.
Ans :- There are many different ways of recognizing data for financial reports which can affect the profit and other ratios for example;
- 1. Recording of revenue-different value of sale and/or timing difference
2 Different accounting policies use like- Inventory valuation, Depreciation method and rate, valuation of property plant and equipment either cost or revaluation model, etc
3. Difference because Exceptional and or Extraordinary item, Different percentage of loan given and/or taken, Dividend payment,etc
What is the difference between book value per share of common stock and market value per share? Why does this disparity occur? Cite an example from WSJ.
Ans :- Both book value and market value can be important tools for investors hoping to build strong portfolios. While the market price of each stock provides clues to a company's financial strength and future prospects, book value reveals the current state of the company and ignores future growth potential. Combining these two figures can help you determine whether a stock is valued correctly, which can help you get the most out of your investment.
Book Value Per Share Definition(BVPS)
The book value of a company represents how much a company is worth based strictly on its balance sheet. To find book value, add up everything the company owns in terms of assets, then subtract everything the company owes, such as debts and other liabilities. Book value reveals how much the company is worth if it were liquidated and all assets were sold for cash. By dividing book value by the total number of shares outstanding, you can find book value per share.
Market Value Per Share Definition(MVPS)
Market value per share is a much easier figure to derive. The market value per share is simply the price of each share on the open market or how much it would cost to buy a share of stock at any given point. While book value represents how much the company's assets are worth, market value reveals what investors think the company is worth and how much they will pay to buy stock in the firm.
Difference between BVPS and MVPS
- Book value is the net worth assigned to common stock divided by the number of common shares outstanding. This is the value from the balance sheet of the net owners equity less preferred stock obligations.
- The market value of the shares is the value the share is traded at. It can also be considered as the earnings per share multiplied by the P/E ratio.
Last question Answer
| Sale | 800000 | $ |
| Assets turnover | 3.5 | times |
| Profit margin on sale | 12 | % |
| Net Income | ? | |
| Assets turnover ratio | Net sales/Average total assets | |
| 3.5 | 800000/Average total assets | |
| Average total assets | 800000/3.5 | 2,28,571 |
| 1. Net Income | 800000*12% | 96000 |
| 2. Return on assets | 96000/228571 | 42% |
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Comparisons of income can be very difficult for two companies
even though they sell the same...
What effect will disinflation following a highly inflationary period have on the reported income of the...
What effect will disinflation following a highly inflationary period have on the reported income of the firm? Why might disinflation prove favorable to financial assets? Comparisons of income can be very difficult for two companies, even though they sell the same products in equal volume. Why?
Summary Information from the financial statements of two companies competing in the same industry follows. Sales...
Summary Information from the financial statements of two companies competing in the same industry follows. Sales Barco Kyan Company Company Data from the current year-end balance sheets Assets Cash $ 19,500 $ 34,000 Accounts receivable, net 37,400 57.400 Current notes receivable (trade) 9,100 7,200 Merchandise inventory 84,440 132,500 Prepaid expenses 5,000 6,950 Plant assets, net 290,000 304,400 Total assets $445,440 $542,450 Barco Kyan Company Company Data from the current years income statement $ 770,000 $880,200 Cost of goods sold 585,100...
Summary information from the financial statements of two companies competing in the same industry follows. Barco...
Summary information from the financial statements of two companies competing in the same industry follows. Barco Kyan Company Company Data from the current year and balance sheets Assets Cash $ 21,000 $31.000 Accounts receivable, et 37.400 54,400 Current notes receivable (trade) 9,800 3.200 Merchandise inventory 84,840 134,500 Prepaid expenses 6,200 2,850 Plant annets, net 290,000 306,400 Total assets $449,240 $542,350 Barco Kyan Company Coepany Data from the current year's income statement Sales $800,000 $920,200 cost of goods sold 587,100 634.500...
Summary information from the financial statements of two companies competing in the same industry follows. Problem...
Summary information from the financial statements of two companies competing in the same industry follows. Problem 13-5A Comparative ratio analysis A1P3 T Barco Company Kyan Company Barco Сотрату Kyan Сотрату Sales Data from the current year-end balance sheets Assets Cash ... $19,500 Accounts receivable, net 37.400 Current notes receivable (trade).... 9.100 Merchandise inventory.......... 84.440 Prepaid expenses 5.000 Plant assets, net... 290,000 Total assets.. $445,440 $ 34,000 57.400 7.200 132.500 6.950 304,400 $542.450 Data from the current year's income statement $770,000...
Kopi Ltd and Teh Ltd are two companies competing in the same industry Below are the summarized financial statements of...
Kopi Ltd and Teh Ltd are two companies competing in the same industry Below are the summarized financial statements of the two companies for the year ended 31 December 20X7 Statement of financial position as at 31 December 20X7 Kopi Ltd Teh Ltd Assets Property, plant and equipment, net 522,000547,920 35,100 67,320 16,380 151,992238,500 Cash 61,200 Accounts receivable, net 103,320 12,960 Current notes receivable (trade) Merchandise inventory Prepaid expenses 9,000 12,510 976,410 Total assets 801,792 Liabilities and Equity Current liabilities...
Summary information from the financial statements of two companies competing in the same industry follows. Barco...
Summary information from the financial statements of two companies competing in the same industry follows. Barco Kyan Company Company Data from the current year-end balance sheets Assets Cash $ 22.500 $35,000 Accounts receivable, net 35,400 57.400 Merchandise inventory 84,840 128.500 Prepaid expenses 5,800 7.200 Plant assets, net 320,000 309,400 Total assets $468,540 $537,500 Bareo Kyan Company Company Data from the current years income statement Sales $770,000 $879,200 Coat of goods sold 587,100 2,500 Interest expense 8.400 10.000 Income tax expense...
Summary information from the financial statements of two companies competing in the same industry follows. Cash...
Summary information from the financial statements of two companies competing in the same industry follows. Cash Barco Kyan Barco Kyan Company Company Company Company Data from the current year end balance sheets Data from the current year's income statesent $770,000 $880, 200 $ 19,500 $ 34,000 Cost of goods sold 585,100 532.500 Accounts receivable. net 37.400 57.400 Interest expense 7,900 13.000 Current notes receivable (trade) 9, 100 7,200 Income tax expense 14,800 24.300 Merchandise inventory 34,449 132.500 Net Income 162,200...
Summary information from the financial statements of two companies competing in the same industry follows. ...
Summary information from the financial statements of two companies competing in the same industry follows. Barco Company Kyan Company Barco Company Kyan Company Data from the current year-end balance sheets Data from the current year’s income statement Assets Sales $ 770,000 $ 880,200 Cash $ 19,500 $ 34,000 Cost of goods sold 585,100 632,500 Accounts receivable, net 46,500 64,600 Interest expense 7,900 13,000 Merchandise inventory 84,440 132,500 Income tax expense 14,800 24,300 Prepaid expenses 5,000 6,950 Net income 162,200...
Summary information from the financial statements of two companies competing in the same industry follows. Barco...
Summary information from the financial statements of two companies competing in the same industry follows. Barco Кyan Company Company Data from the current year-end balance sheets Assets Cash 22,000 $ 35,000 Accounts receivable, net 33,400 54,400 Current notes receivable (trade) Merchandise inventory 9,900 8,800 84,640 142,500 Prepaid expenses 7,600 5,700 Plant assets, net 360,000 307,400 Total assets 515,640 $ 555,700 Liabilities and Equity Current 1iabilities 62,340 $ 101,300 Long-term notes payable Common stock, $5 par value Retained earnings 80,800 103,000...
Summary information from the financial statements of two companies competing in the same industry follows. ...
Summary information from the financial statements of two companies
competing in the same industry follows.
Barco
Company
Kyan
Company
Barco
Company
Kyan
Company
Data from the current year-end balance
sheets
Data from the current year’s income
statement
Assets
Sales
$
770,000
$
880,200
Cash
$
19,500
$
34,000
Cost of goods sold
585,100
632,500
Accounts receivable, net
46,500
64,600
Interest expense
7,900
13,000
Merchandise inventory
84,440
132,500
Income tax expense
14,800
24,300
Prepaid expenses
5,000
6,950
Net income
162,200...
Summary Information from the financial statements of two companies competing in the same industry follows. Sales Barco Kyan Company Company Data from the current year-end balance sheets Assets Cash $ 19,500 $ 34,000 Accounts receivable, net 37,400 57.400 Current notes receivable (trade) 9,100 7,200 Merchandise inventory 84,440 132,500 Prepaid expenses 5,000 6,950 Plant assets, net 290,000 304,400 Total assets $445,440 $542,450 Barco Kyan Company Company Data from the current years income statement $ 770,000 $880,200 Cost of goods sold 585,100...
Summary information from the financial statements of two companies competing in the same industry follows. Barco Kyan Company Company Data from the current year and balance sheets Assets Cash $ 21,000 $31.000 Accounts receivable, et 37.400 54,400 Current notes receivable (trade) 9,800 3.200 Merchandise inventory 84,840 134,500 Prepaid expenses 6,200 2,850 Plant annets, net 290,000 306,400 Total assets $449,240 $542,350 Barco Kyan Company Coepany Data from the current year's income statement Sales $800,000 $920,200 cost of goods sold 587,100 634.500...
Summary information from the financial statements of two companies competing in the same industry follows. Problem 13-5A Comparative ratio analysis A1P3 T Barco Company Kyan Company Barco Сотрату Kyan Сотрату Sales Data from the current year-end balance sheets Assets Cash ... $19,500 Accounts receivable, net 37.400 Current notes receivable (trade).... 9.100 Merchandise inventory.......... 84.440 Prepaid expenses 5.000 Plant assets, net... 290,000 Total assets.. $445,440 $ 34,000 57.400 7.200 132.500 6.950 304,400 $542.450 Data from the current year's income statement $770,000...
Kopi Ltd and Teh Ltd are two companies competing in the same industry Below are the summarized financial statements of the two companies for the year ended 31 December 20X7 Statement of financial position as at 31 December 20X7 Kopi Ltd Teh Ltd Assets Property, plant and equipment, net 522,000547,920 35,100 67,320 16,380 151,992238,500 Cash 61,200 Accounts receivable, net 103,320 12,960 Current notes receivable (trade) Merchandise inventory Prepaid expenses 9,000 12,510 976,410 Total assets 801,792 Liabilities and Equity Current liabilities...
Summary information from the financial statements of two companies competing in the same industry follows. Barco Kyan Company Company Data from the current year-end balance sheets Assets Cash $ 22.500 $35,000 Accounts receivable, net 35,400 57.400 Merchandise inventory 84,840 128.500 Prepaid expenses 5,800 7.200 Plant assets, net 320,000 309,400 Total assets $468,540 $537,500 Bareo Kyan Company Company Data from the current years income statement Sales $770,000 $879,200 Coat of goods sold 587,100 2,500 Interest expense 8.400 10.000 Income tax expense...
Summary information from the financial statements of two companies competing in the same industry follows. Cash Barco Kyan Barco Kyan Company Company Company Company Data from the current year end balance sheets Data from the current year's income statesent $770,000 $880, 200 $ 19,500 $ 34,000 Cost of goods sold 585,100 532.500 Accounts receivable. net 37.400 57.400 Interest expense 7,900 13.000 Current notes receivable (trade) 9, 100 7,200 Income tax expense 14,800 24.300 Merchandise inventory 34,449 132.500 Net Income 162,200...
Summary information from the financial statements of two companies competing in the same industry follows. Barco Кyan Company Company Data from the current year-end balance sheets Assets Cash 22,000 $ 35,000 Accounts receivable, net 33,400 54,400 Current notes receivable (trade) Merchandise inventory 9,900 8,800 84,640 142,500 Prepaid expenses 7,600 5,700 Plant assets, net 360,000 307,400 Total assets 515,640 $ 555,700 Liabilities and Equity Current 1iabilities 62,340 $ 101,300 Long-term notes payable Common stock, $5 par value Retained earnings 80,800 103,000...
Summary information from the financial statements of two companies
competing in the same industry follows.
Barco
Company
Kyan
Company
Barco
Company
Kyan
Company
Data from the current year-end balance
sheets
Data from the current year’s income
statement
Assets
Sales
$
770,000
$
880,200
Cash
$
19,500
$
34,000
Cost of goods sold
585,100
632,500
Accounts receivable, net
46,500
64,600
Interest expense
7,900
13,000
Merchandise inventory
84,440
132,500
Income tax expense
14,800
24,300
Prepaid expenses
5,000
6,950
Net income
162,200...
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