emi
emi
E2-32. Identify and Classify Balance Sheet and Income Statement Accounts
Following are selected accounts for Terex Corp for the fiscal year ended December 31, 2018.
a. Indicate whether each account appears on the balance sheet (B) or income statement (I).
6. Using the following data, compute total assets and total expenses.
$ millions
Total revenues....
Accrued compensation and benefits
Depreciation and amortization expense.
Retained earings
Net income.
Joel Tuorini
Property, plant, and equipment, net.
Selling general, and administrative expense.
Inventory.
Total liabilities.
Total stockholders' equity.
Income Statement ($thousands)
Sales
Cost of goods sold.
E2-33. Compare Income Statements and Balance Sheets of Competitors
Following are selected income statement and balance sheet data from two retailers, Abercrombie &
Fitch (clothing retailer in the high-end market) and TJX Companies (clothing retailer in the value
priced market), for the fiscal year ended February 2, 2019.
Gross profit..
Total expenses.
Net income.
Joel Tu
Balance Sheet($thousands)
Current assets
Long-term assets
Total assets
Current Tables
Long-term bes
Total liabilities.
Amount
$5,125.0
152.2
59.7
Stockholders' equity
Total abilities and equity
749.0
113.7
345.6
673.5
1.212.0
2.624.9
861.0
ANF
TJX
$3,500,109
$35,972,934
1.430.193 27,831,177
2.159,916
2,081,108
78,808
ANF
$1,335,950
1.049.643
$2.385.593
Classification
558.917
608.055
1,166.972
1.218.621
$2,385.593
11,141,757
8,081,959
$ 3,059,798
TJX
$ 8,469,222
5,856,807
$14,326,029
$ 5,531,374
3,746,049
9,277,423
5,048,606
$14,326,029
LO1, 2
Terex Corp (TEX)
a. Express each income statement amount as a percentage of sales. Comment on any differences observed
between these two companies, especially as they relate to their respective business models.
b. Express each balance sheet amount as a percentage of total assets. Comment on any differences ob-
served between these two companies, especially as they relate to their respective business models.
e. Which company has a lower proportion of debt? What do the ratios tell us about the relative riskiness
of the two companies?
MBC
L01, 2
Abercrombie & Fitch
TJX Companies (TJX)
MBC
uorin no
Joel'
Joel Tuorinien/nof the two companies?
E2-34. Compare Income Statements and Balance Sheets of Competitors
Following are selected income statement and balance sheet data from two pharmaceutical companies,
Pfizer and Dr. Reddy's, for their respective 2018 fiscal years.
morinic
0:53 AM
Copyright 2021 Cambridge Business Publishers | For the Personal Use of Joel Tuoriniemi | #55899
prijemi
Copyright 2021 Cambridge Business Publishers | For the Personal Use of Joel Tuoriniemi #55899
Cambridge Business shers
Financial & Managerial Accounting for MBAs, 6e by Easton, Halsey, McAnally
4. The company would have reported operating loss of $1,878 and cash flow would have been
unchanged.
P2-40. Collect and Use Additional Information from 10-K
Use the SEC website (www.sec.govedgarscarchetgar/companysearch.html) to download the 2018 10-K for
Facebook Inc. and answer the following questions.
Joel Tuorinien
a. On what date did Facebook file its 2018 10-K with the SEC? Compare this date to the company's
fiscal year-end. Why do the two dates differ?
6. Item 1 of the 10-K reports the company's mission. What is its mission?
c. Who does Facebook see as its main competition? See Item 1 of the 10-K.
d. As of December 31, 2018, how many people worked for Facebook?
$ millions
Target Corp.
Nike Inc.....
Harley-Davidson.
Tuorini
Module 2 Introducing Financial Statements
e. How many daily active users did Facebook have in December 2018? How does this compare with
December 2017?
Pfizer
f. Many companies file Schedule II with the 10-K. One of the components of Schedule II is an estimate
of the amount owing from customers that will not be collected (allowance for doubtful accounts).
What does Facebook report concerning this schedule? Explain
g. Who are the company's auditors?
P2-41. Compare Operating Characteristics Across Industries
Following are selected income statement and balance sheet data for companies in different industries.
Sales
$75,356
36,397
5,717
Cost of
Goods
Net
Sold Income Assets Liabilities
Required
a. Compute the following ratios for each company.
1. Gross profit/Sales
2. Net income/Sales
$53,299 $2,937 $41,290 $29,993
20,441 1,933 22,536 12,724
3.352 531 10.666 8,892
53,647 11,248 11,188 159,422 95,664
Joel Tuorinier
Stockholders
Equity
$11,297
9,812
1,774
63,758
LO1, 2
Prizer, Inc (PFE)
Dr. Reddy's
Laboratories (RDY)
3. Net income/Stockholders' equity
4. Liabilities/Stockholders' equity
b. Comment on any differences among the companies' gross profit-to-sales ratios and net income as a per
centage of sales. Do differences in the companies business models explain the differences observed?
Which company reports the highest ratio of net income to equity? Suggest one or more reasons for
this result.
MBC
d. Which company has financed itself with the highest percentage of liabilities to equity? Suggest one
or more reasons why this company can take on such debt levels.
prinier
Facebook (FB)
LO1, 2
MBC
Target Corp. (TGT)
Nike (NCE)
Harley-Davidson
(HOG)
Pfizer (PFE)
oel Tuorinier/nmi
or more reasons why this company can take on such debt levels.
P2-42. Compare Cash Flows Across Retailers
Following are selected accounts from the income statement and the statement of cash flows for several
retailers, for their fiscal years ended in 2018.
$ millions
Macy's....
Home Depot Inc...
Best Buy
Target Corp.
Walmart Stores...
Cash Flows from
Operating Investing Financing
$ (1544)
$ 1,735
13,038
(12,420)
(2018)
75,356
(3,416)
(3,644)
511,729 6,670 27,753 (24,036) (2.537)
oel Tuoriniemi
Net
Sales Income
$ 25,739 $ 1,108
108,203 11,121
42.879 1,464
2,937
2,400
5,973
$ (456)
(2,416)
Required
a. Compute the ratio of net income to sales for each company. Rank the companies on the basi
ratio. Do their respective business models give insight into these differences?
LO2, 4
MBC
Macy's (M)
Home Depot (HD)
Best Buy (BBY)
Target (TGT)
Walmart (WMT)
Joel Tuoniemi
Fig: 1
Fig: 2
Fig: 3
