Question : 157. The following information from Omega Corporation’s balance sheets as of : 1256453

Accounting

157. The following information is from Omega Corporation’s balance sheets as of December 31, 2013 and 2014 and its income statement for 2014:

2014

2013

Assets:

Cash

$ 18,000

$ 22,000

Marketable securities

25,000

Accounts receivable

38,000

42,000

Inventory

61,000

52,000

Prepaid insurance

6,000

9,000

Long-term investments

49,000

20,000

Plant assets, net

218,000

225,000

Total assets

$415,000

$370,000

Net income

$ 62,250

Sales (all on credit)

305,000

Cost of goods sold

123,000

Interest expense

15,600

Income tax expense

27,000

From the above information, calculate the following ratios for 2014: (a) Inventory turnover.(b) Accounts receivable turnover.(c) Return on total assets.(d) Times interest earned.(e) Total asset turnover.

158. The following are summaries from the income statements and balance sheets of Red Shoe, Inc. and Blue Shoe, Inc.

RED SHOE, INC.

Consolidated Balance Sheets

(in millions)

May 31

2014

2013

Assets

Current assets:

Cash and cash equivalents

$634.0

$575.5

Accounts receivable, net of allowance

2,101.1

1,804.1

Inventories

1,514.9

1,373.8

Other current assets

429.9

401.3

Total current assets

4,679.9

4,154.7

Property, plant, and equipment, net

1,620.8

1614.5

Other long-term assets

413.2

670.8

Total assets

$6,713.9

$6,440.0

liabilities and Stockholders’ Equity

Current liabilities:

Current portion of long-term debt

$205.7

$55.3

Notes payable

75.4

425.2

Accounts payable

572.7

504.4

Accrued liabilities

1,054.2

765.3

Income taxes payable

107.2

83.0

Total current liabilities

2,015.2

1,833.2

Long-term liabilities

708.0

767.8

Total liabilities

2,723.2

2,601.0

Stockholders’ equity:

Common stock

2.8

Contributed capital in excess of par value

589.0

538.7

Unearned stock compensation

(0.6)

(5.1)

Accumulated other comprehensive loss

(239.7)

(192.4)

Retained earnings

3,639.2

3,495.0

Total stockholders’ equity

3,990.7

3,839.0

Total liabilities and stockholders’ equity

$ 6,713.9

$ 6,440.0

RED SHOE, INC.

Consolidated Statement of Income

May 31, 2014

(in millions)

Revenues

$ 10,697.0

Cost of sales

6,313.6

Gross profit

4,383.4

Operating expenses

3,137.6

Operating income

1,245.8

Interest expense

42.9

Other revenues and expenses

79.9

Income before tax

1,123.0

Income taxes

382.9

Income before effect of accounting change

740.1

Cumulative effect of accounting change, net of tax

266.1

Net income

$ 474.0

BLUE SHOE, INC.

Consolidated Balance Sheets

(in millions)

Jan. 3,

2014

Jan. 4,

2013

Assets

Current assets:

Cash and cash equivalents

$34.5

$22.2

Accounts receivable, net of allowance

15.5

14.7

Inventories

27.2

28.4

Other current assets

3.5

4.2

Total current assets

80.7

69.5

Property, plant, and equipment, net

5.7

7.0

Other long-term assets

1.1

1.5

Total assets

$87.5

$78.0

Liabilities and Stockholders’ Equity

Current liabilities:

Accounts payable

$8.5

$6.6

Accrued liabilities

7.8

5.6

Total current liabilities

16.3

12.2

Long-term liabilities

2.5

2.6

Total liabilities

18.8

14.8

Stockholders’ equity:

Common stock

2.3

Contributed capital in excess of par value

17.8

17.4

Unearned stock compensation

(0.1)

(0.5)

Accumulated other comprehensive loss

(0.9)

(1.3)

Treasury stock

(6.3)

(5.4)

Retained earnings

55.9

50.7

Total stockholders’ equity

68.7

63.2

Total liabilities and stockholders’ equity

$87.5

$78.0

BLUE SHOE, INC.

Consolidated Statement of Income

January 3, 2014

(in millions)

Revenues

$ 133.5

Cost of sales

87.3

Gross profit

46.2

Operating expenses

37.3

Operating income

8.9

Interest expense

(0.1)

Other revenues and expenses

0.3

Income before tax

9.1

Income taxes

3.9

Net income

$5.2

(1) For both companies compute the following ratios for 2014:

(a) Current ratio(b) Acid-test ratio(c) Accounts receivable turnover(d) Inventory turnover(e) Days’ sales in inventory(f) Days’ sales uncollectedWhich company do you consider to be the better short-term credit risk? Explain.(2) For both companies compute the following ratios for 2014:(a) Profit margin ratio(b) Return on total assets(c) Return on common stockholders’ equityWhich company do you consider to have better profitability ratios?

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July 1, 2023

9.1 The United States in the International Economy

1) Following the tariff imposed on Chinese tires, some businesspeople correctly argued that the U.S. tariff would result in

A) China retaliating by raising tariffs on some U.S. exports.

B) China halting the sale of all products in the United States.

C) U.S. firms never being able to meet the demand for U.S.-produced tires.

D) the government demanding price cuts from U.S. tire manufacturers.

2) Workers in industries protected by tariffs and quotas are likely to support these trade restrictions because

A) they do not want to offend their employers who want them.

B) politicians lobby to convince workers the restrictions will make them better off.

C) they believe the restrictions will protect their jobs.

D) they don't understand that the restrictions will threaten their jobs.

3) The intention of the U.S. tariff on Chinese tires was to

A) protect jobs in the U. S. tire industry.

B) protect infant industries in tire U.S. tire market.

C) insure that Chinese tires meet U.S. quality and safety standards.

D) save the government money by restricting the sale of more expensive Chinese-made tires.

4) In the 1930s, the United States charged an average tariff rate ________. Today, the rate is ________.

A) of 100 percent; 20 percent

B) above 50 percent; less than 1.5 percent

C) of less than 10 percent; over 40 percent

D) of 17 percent; 33 percent

5) A tariff is a tax imposed by a government on

A) exports.

B) services.

C) imports.

D) luxury items.

6) Goods and services bought domestically but produced in other countries are referred to as

A) exports.

B) imports.

C) transfer payments.

D) foreign consumption.

7) Exports are domestically produced goods and services

A) sold to other countries.

B) sold to the government.

C) sold at home.

D) which are used to produce other goods and services.

8) When Roxanne, a U.S. citizen, purchases a designer dress from Barneys of New York that was made in Milan, the purchase is

A) both a U.S. and an Italian import.

B) a U.S. import and an Italian export.

C) a U.S. export and an Italian import.

D) neither an export nor an import for either country.

9) When BMW, a German company, purchases a welding machine that was made in Toronto, the purchase is

A) both a German and a Canadian import.

B) a German import and a Canadian export.

C) a German export and a Canadian import.

D) neither an export nor an import for either country.

10) Which of the following statements about the importance of trade to the U.S. economy is true?

A) Since 1950, both exports and imports have steadily decreased as a fraction of U.S. gross domestic product.

B) Overall, about 80 percent of U.S. manufacturing jobs depend directly or indirectly on exports.

C) The United States is the second largest exporter in the world.

D) The U.S. economy is highly dependent on international trade for growth in its gross domestic product.