Compute the fixed assets turnover for each given firm

Assignment Help Financial Accounting

Reference no: EM13902236

1. CALCULATING AND INTERPRETING FIXED ASSETS TURNOVER RATIOS. Texas Instruments (TI) designs and manufactures semiconductor products for use in computers, telecommunications equipment, automobiles, and other electronics- based products. The manufacturing of semiconductors is highly capital-intensive. Hewlett- Packard Corporation (HP) manufactures computer hardware and various imaging products, such as printers and fax machines. Exhibit 4.25 presents selected data for TI and HP for 2006-2008.

Required

a. Compute the fixed assets turnover for each firm for 2006, 2007, and 2008.

b. Suggest reasons for the differences in the fixed assets turnovers of TI and HP.

c. Suggest reasons for the changes in the fixed assets turnovers of TI and HP during the three-year period.

2. CALCULATING AND INTERPRETING THE RATE OF RETURN ON COMMON SHAREHOLDERS' EQUITY AND ITS COMPONENTS. JCPenney operates a chain of retail department stores, selling apparel, shoes, jewelry, and home furnishings. It also offers most of its products through catalog distribution. During fiscal Year 5, it sold Eckerd Drugs, a chain of retail drugstores, and used the cash proceeds, in part, to repurchase shares of its common stock. Exhibit 4.26 presents selected data for JCPenney for fiscal Year 3, Year 4, and Year 5.

Required

a. Calculate the rate of ROA for fiscal Year 3, Year 4, and Year 5. Disaggregate ROA into the profit margin for ROA and total assets turnover components. The income tax rate is 35 percent.

b. Calculate the rate of ROCE for fiscal Year 3, Year 4, and Year 5. Disaggregate ROCE into the profit margin for ROCE, assets turnover, and capital structure leverage components.

c. Suggest reasons for the changes in ROCE over the three years.

d. Compute the ratio of ROCE to ROA for each year.

e. Calculate the amount of net income available to common stockholders derived from the use of financial leverage with respect to creditors' capital, the amount derived from the use of preferred shareholders' capital, and the amount derived from com- mon shareholders' capital for each year.

f. Did financial leverage work to the advantage of the common shareholders in each of the three years? Explain.

Text Book: Financial Reporting, Financial Statement Analysis and Valuation: A Strategic Perspective By James Wahlen, Stephen Baginski, Mark Bradshaw.

Reference no: EM13902236

Questions Cloud

Population and the trend of migration : Describe your population and the trend of migration. Analyze the factors that influence the distribution of your population.

Find the force constant of the spring : A .160kg mass attatched to a spring oscillates horizontally witha an amplitude of .0760m and a maximum speed of .0525m/s.a.) Find the force constant of the spring.

Identify reasons for changes in the capital leverage ratio : Identify possible reasons for the changes in the capital structure leverage ratio during the five-year period. In which years did financial leverage work to the advantage of the common share-holders?

Describe the development industry in boston : Describe the development industry in Boston after the advent of streetcar lines. What sort(s) of public health problems were recognized and made the object of public intervention in Boston and its surrounding towns?

Compute the fixed assets turnover for each given firm : Compute the fixed assets turnover for each firm for 2006, 2007, and 2008. Suggest reasons for the differences in the fixed assets turnovers of TI and HP.

Land use management stable : Why do you think zoning under police power has become the workhorse in the land use management stable as opposed to other land use management alternatives?

Yoshi company completed the following transactions : Yoshi Company completed the following transactions and events involving its delivery trucks.

Baby boom generation : Demographic trends show that, with the aging of the "baby boom generation" older adults represent one of the faster growing segments of the United States population.

Compute accounts receivable turnovers for nucor and ak steel : Calculate the accounts receivable turnovers for Nucor and AK Steel for 2007 and 2008. Describe the likely reasons for the differences in the accounts receivable turnovers for these two firms.

User Account

All Pages