Question :
108) Divide the class into teams of three or four : 1253051
108) Divide the class into teams of three or four people. Each team member should work the following problem separately outside of class. Then give the students time in class to compare answers with their teammates and put together a final, correct copy of the problem. Each team should turn in only one copy of the problem for grading. All team members will receive the same grade.
Use the adapted financial statements from Amazon.com, Inc. to answer the following questions:
1.Calculate the current ratio for 2004.
2.Calculate the current ratio for 2005.
3.Did the current ratio improve in 2005?
4.Calculate the cash from operations to current liabilities for 2004.
5.Calculate the cash from operations to current liabilities for 2005.
6.Did the cash from operations to current liabilities improve in 2005?
7.Calculate the inventory turnover ratio for 2004.
8.Calculate the inventory turnover ratio for 2005.
9.Did the inventory turnover ratio improve in 2005?
10.Calculate the accounts receivable turnover ratio for 2004.
11.Calculate the accounts receivable turnover ratio for 2005.
12.Did the accounts receivable turnover ratio improve in 2005?
13.Use the liquidity ratios you have just calculated to discuss Amazon.com’s liquidity.
14.Calculate the return on assets for 2004.
15.Calculate the return on assets for 2005.
16.Did the return on assets improve in 2005?
17.Calculate the asset turnover ratio for 2004.
18.Calculate the asset turnover ratio for 2005.
19.Did the asset turnover ratio improve in 2005?
20.Calculate the return on equity for 2004. (Amazon.com has issued no preferred stock)
21.Calculate the return on equity for 2005. (Amazon.com has issued no preferred stock)
22.Did the return on equity improve in 2005?
23.Calculate the gross profit ratio for 2004.
24.Calculate the gross profit ratio for 2005.
25.Did the gross profit ratio improve in 2005?
26.Calculate earnings per share for 2004. (Amazon.com has issued no preferred stock)
27.Calculate earnings per share for 2005. (Amazon.com has issued no preferred stock)
28.Did earnings per share improve in 2005?
29.Use the profitability ratios you have just calculated to discuss Amazon.com’s profitability.
30.Based on ALL of the ratios you have just calculated, do you consider Amazon.com to be a good investment? Why?
The following information has been adapted from the 2004 and 2005 annual reports of Halliburton Company’s worldwide operations, available online at
http://ir.halliburton.com/phoenix.zhtml?c=67605&p=irol-irhome
HALLIBURTON COMPANY
Consolidated Statements of Operations
Years ended December 31
Millions of dollars and shares except per share data 2005 2004 2003
Total revenue $20,994 $20,466 $16,271
OPERATING COSTS AND EXPENSES
Cost of sales18,14619,32315,268
General and administrative380361330
Gain on sales of business assets (net) (194) (55) (47)
Total operating costs and expenses 18,332 19,629 15,551
OPERATING INCOME2,662837720
Interest expense(207)(229)(139)
Interest income644430
Other, net (83) (26) (38)
INCOME FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES2,436626573
Income tax expense(79)(241)(234)
Income (loss) from discontinued operations, net
of tax (expense) benefit of $(1), $180, and $(6) 1 (1,364) (1,151)
NET INCOME (LOSS)$2,358$(979)$(812)
Other information that might be useful: 2005 2004 2003
Weighted average common shares outstanding505437434
Cash dividends per share$0.50$0.50$0.50
Market price of common stock$62.04$37.39$25.00
HALLIBURTON COMPANY
Condensed Consolidated Statements of Cash Flows
Years ended December 31
Millions of dollars 2005 2004 2003
Cash flows from operating activities$ 701$ 928$ (775)
Cash flows from investing activities493(398)(729)
Cash flows from financing activities (720) 283 1,636
Increase in cash$ 474$ 813$ 132
HALLIBURTON COMPANY
Consolidated Balance Sheets
December 31
(in millions) 2005 2004 2003
ASSETS
CURRENT ASSETS:
Cash$ 2,391$ 1,917$ 1,815
Short-term investments-891-
Receivables4,8015,7514,765
Inventories953791695
Other current assets 1,182 680 644
TOTAL CURRENT ASSETS9,32710,0307,919
Property, plant & equipment, net2,6482,5532,526
Goodwill765795670
Long-term investments382541579
Other long-term assets 1,888 1,945 3,805
TOTAL ASSETS$15,010$15,864$15,499
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable$ 1,967$ 2,339$ 1,776
Unearned revenue661553741
Accrued wages and benefits648473400
Current maturities of long-term debt36134722
Short-term notes payable2215-
Other current liabilities 778 3,405 3,625
TOTAL CURRENT LIABILITIES4,4377,1326,564
Long-term debt2,8133,5933,415
Other long-term liabilities 1,243 1,099 2,873
TOTAL LIABILITIES 8,493 11,824 12,852
SHAREHOLDERS’ EQUITY:
Common stock and paid-in capital in excess of par4,1353,7581,415
Retained earnings 2,756 759 1,809
6,8914,5173,224
Less treasury stock, at cost (374) (477) (577)
TOTAL SHAREHOLDERS’ EQUITY 6,517 4,040 2,647
TOTAL LIABILITIES AND
SHAREHOLDERS’ EQUITY$15,010$15,864$15,499
