Question 2: The Method of Comparables: Dell, Inc. Here are some accounting numbers and market values (in millions) for Hewlett-Packard and Lenovo Group for 2008. These two computer manufacturers are considered to be comparables for Dell, Inc. Sales Earnings Book Value Market Value Hewlett-Packard Co. $84,229 $7,264 $38,526 $115,700 Lenovo Group Ltd. 14,590 161 1,134 6,381 a. Calculate price-to-sales, price-earnings (P/E), and price-to-book (P/B) ratios for Hewlett-Packard and Lenovo. b. Dell reported the following numbers for fiscal year 2008: $61,133 million $ 2,947 million Book value $ 3,735 million Sales Earnings Apply multiples for Hewlett-Packard and Lenovo to price Dell's 2,060 million out- standing shares. What difficulties did you encounter?

Question 2: The Method of Comparables: Dell, Inc. Here are some accounting numbers and market values (in millions) for Hewlett-Packard and Lenovo Group for 2008. These two computer manufacturers are considered to be comparables for Dell, Inc. Sales Earnings Book Value Market Value Hewlett-Packard Co. $84,229 $7,264 $38,526 $115,700 Lenovo Group Ltd. 14,590 161 1,134 6,381 a. Calculate price-to-sales, price-earnings (P/E), and price-to-book (P/B) ratios for Hewlett-Packard and Lenovo. b. Dell reported the following numbers for fiscal year 2008: $61,133 million $ 2,947 million Book value $ 3,735 million Sales Earnings Apply multiples for Hewlett-Packard and Lenovo to price Dell's 2,060 million out- standing shares. What difficulties did you encounter?

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter5: Sales And Receivables

Section: Chapter Questions

Problem 96.4C

See similar textbooks

Similar questions

Solvency and Profitability Trend Analysis (Part A is the only one I got incorrect, let me know what the correct answers are) Addai Company has provided the following comparative information:     20Y8     20Y7     20Y6     20Y5     20Y4 Net income $273,406 $367,976 $631,176 $884,000 $800,000 Interest expense 616,047 572,003 528,165 495,000 440,000 Income tax expense 31,749 53,560 106,720 160,000 200,000 Total assets (ending balance) 4,417,178 4,124,350 3,732,443 3,338,500 2,750,000 Total stockholders’ equity (ending balance) 3,706,557 3,433,152 3,065,176 2,434,000 1,550,000 Average total assets 4,270,764 3,928,396 3,535,472 3,044,250 2,475,000 Average total stockholders' equity 3,569,855 3,249,164 2,749,588 1,992,000 1,150,000 You have been asked to evaluate the historical performance of the company over the last five years. Selected industry ratios have remained relatively steady at the…
Solvency and Profitability Trend Analysis (Picture is attached and this is the only one I got wrong, what did I do wrong?) Addai Company has provided the following comparative information:     20Y8     20Y7     20Y6     20Y5     20Y4 Net income $273,406 $367,976 $631,176 $884,000 $800,000 Interest expense 616,047 572,003 528,165 495,000 440,000 Income tax expense 31,749 53,560 106,720 160,000 200,000 Total assets (ending balance) 4,417,178 4,124,350 3,732,443 3,338,500 2,750,000 Total stockholders’ equity (ending balance) 3,706,557 3,433,152 3,065,176 2,434,000 1,550,000 Average total assets 4,270,764 3,928,396 3,535,472 3,044,250 2,475,000 Average total stockholders' equity 3,569,855 3,249,164 2,749,588 1,992,000 1,150,000 You have been asked to evaluate the historical performance of the company over the last five years. Selected industry ratios have remained relatively steady at the following…
Solvency and Profitability Trend Analysis Addai Company has provided the following comparative information: 20Y8 20Y7     20Y6     20Y5 20Y4 Net income $1,078,700 $929,900 $781,400 $667,900 $566,000 Interest expense 366,800 334,800 289,100 220,400 175,500 Income tax expense 345,184 260,372 218,792 173,654 135,840 Total assets (ending balance) 8,226,651 8,779,231 6,276,721 6,620,869 5,020,826 Total stockholders' equity (ending balance) 2,543,681 3,148,667 2,003,133 2,553,135 1,531,881 Average total assets 8,502,941 7,527,976 6,448,795 5,517,391 4,722,930 Average stockholders' equity 2,846,174 2,575,900 2,278,134 2,042,508 1,808,307 You have been asked to evaluate the historical performance of the company over the last five years. Selected industry ratios have remained relatively steady at the following levels for the last five years:…
Solvency and Profitability Trend Analysis Addai Company has provided the following comparative information: 20Y8 20Y7 20Y6 20Y5 20Y4 Net income $1,078,700 $929,900 $781,400 $667,900 $566,000 Interest expense 366,800 334,800 289,100 220,400 175,500 Income tax expense 345,184 260,372 218,792 173,654 135,840 Total assets (ending balance) 8,226,651 8,779,231 6,276,721 6,620,869 5,020,826 Total stockholders' equity (ending balance) 2,543,681 3,148,667 2,003,133 2,553,135 1,531,881 Average total assets 8,502,941 7,527,976 6,448,795 5,517,391 4,722,930 Average stockholders' equity 2,846,174 2,575,900 2,278,134 2,042,508 1,808,307 You have been asked to evaluate the historical performance of the company over the last five years. Selected industry ratios have remained relatively steady at the following levels for the last five years:…
QUESTION 8 P18-5A P14.5A (LO 3) are presented here (in millions). Compute selected ratios, and compare liquidity, profitability, and solvency for two сотрanies. Suppose selected financial data of Target and Wal-Mart for 2020 Wal-Mart Target Corporation Stores, Inc. Income Statement Data for Year Net sales $65,357 $408,214 Cost of goods sold 45,583 304,657 Selling and administrative expenses 15,101 79,607 L Wal-Mart Target Corporation Stores, Inc. Interest expense 707 2,065 Other income (expense) (94) (411) Income tax eхрense 1,384 7,139 $ 2,488 Balance Sheet Data (End of Year) Net income $ 14,335 Current assets $18,424 $ 48,331 Noncurrent assets 26,109 122,375 Total assets $44,533 $170,706 Current liabilities $11,327 $ 55,561 Long-term debt Total stockholders' equity 17,859 44,089 15,347 71,056 Total liabilities and stockholders' equity $44,533 $170,706 Beginning-of-Year Balances Total assets $44,106 $163,429 Total stockholders' equity 13,712 65,682 Current liabilities 10,512 55,390…
QUESTION 7 Р18.3А P18.ЗА (LO 3) Jergan Corporation are presented here. Perform ratio analysis, and discuss changes in financial position and operating results. Jergan Corporation Condensed balance sheet and income statement data for Balance Sheets December 31 2020 2019 2018 Cash $ 30,000 $ 20,000 $ 18,000 Accounts receivable (net) 50,000 45,000 48,000 Other current assets 90,000 95,000 64,000 Investments 55,000 70,000 45,000 Plant and equipment (net) 500,000 370,000 358,000 $725,000 $600,000 $533,000 Current liabilities $ 85,000 $ 80,000 $ 70,000 Long-term debt Common stock, $10 par 145,000 85,000 50,000 320,000 310,000 300,000 Retained earnings 175,000 125,000 113,000 $725,000 $600,000 $533,000 Jergan Corporation Income Statements For the Years Ended December 31 2020 2019 Sales revenue $740,000 $600,000 Less: Sales returns and allowances 40,000 30,000 Net sales 700,000 570,000 Cost of goods sold Gross profit 425,000 350,000 275,000 220,000 Operating expenses (including income taxes)…
Direction: Read the following independent cases given below. Provide necessary answer for all issues being asked. Provide a separate answer sheet for all your specific answers. A. The DIGITAL Company provided you with the following comparative Income Statement for your analysis. He wants you to enlighten the management on why the net profit decline. Sales Cost of Sales Gross Margin Operating Expenses Net Profit 2020 P680,000 170,000 P510,000 210,000 P300000 2021 P 570,000 200,000 P 370,000 100,000 P 270.000 Required: 1. Using Horizontal Analysis, calculate the peso change and the percentage changes. 2. Using Vertical Analysis, prepare the comparative common-size Income Statements. 3. Evaluate the results of your Analysis and explain to the management why the net profit declined.
Solvency and Profitability Trend Analysis (Graph Picture from A-D is on the buttom for references) Addai Company has provided the following comparative information: 20Y8 20Y7 20Y6 20Y5 20Y4 Net income $273,406 $367,976 $631,176 $884,000 $800,000 Interest expense 616,047 572,003 528,165 495,000 440,000 Income tax expense 31,749 53,560 106,720 160,000 200,000 Total assets (ending balance) 4,417,178 4,124,350 3,732,443 3,338,500 2,750,000 Total stockholders’ equity (ending balance) 3,706,557 3,433,152 3,065,176 2,434,000 1,550,000 Average total assets 4,270,764 3,928,396 3,535,472 3,044,250 2,475,000 Average total stockholders' equity 3,569,855 3,249,164 2,749,588 1,992,000 1,150,000 You have been asked to evaluate…
K Find online the annual 10-K report for Costco Wholesale Corporation (COST) as of August 30, 2020. a. Compute Costco's net profit margin, total asset turnover, and equity multiplier. b. Verify the DuPont Identity for Costco's ROE. c. Repeat the analysis from parts (a) and (b) using Walmart Stores (WMT) instead. Specifically, use Walmart's data as of January 31, 2020. Based on the DuPont Identity, what explains the difference between the two firms' ROE? a. Compute Costco's net profit margin, total asset turnover, and equity multiplier. The net profit margin is%. (Round to two decimal places.) (Round to two decimal places.) The total asset turnover is The total asset turnover is The equity multiplier is b. Verify the DuPont Identity for Costco's ROE. The ROE is%. (Round to two decimal places.) c. Repeat the analysis from parts (a) and (b) using Walmart Stores (WMT) instead. Specifically, use Walmart's data as of January 31, 2020. The net profit margin is%. (Round to two decimal places.)…
Prepare a horizontal analysis of the following excerpt of an income statement. Eye Witness Security GmbH Income Statement 2012 2011 Net sales €540.400 €573.000 Cost of goods sold 130.300 165.800 Gross profit (loss) 410.100 407.200 Operating expenses 264.900 205.100 Net income (loss) €145.200 €202.100
Q4: You have been asked to assess whether Walgreen, a drugstore chain, is correctly priced relative to its competitors in the drugstore industry. The following are the price/sales ratios, profit margins, and other relative details of the firms in the drugstore industry. Company P/S Ratio Profit Margin (%) Payout (%) Expected Growth (%) Beta Arbor Drugs 0.42 3.40 18 14.0 1.05 Big B 0.30 1.90 14 23.5 0.70 Drug Emporium 0.10 0.60 0 27.5 0.90 Fay’s 0.15 1.30 37 11.5 0.90 Genovese 0.18 1.70 26 10.5 0.80 Longs Drug 0.30 2.00 46 6.0 0.90 Perry Drugs 0.12 1.30 0 12.5 1.10 Rite-Aid 0.33 3.20 37 10.5 0.90 Walgreen 0.60 2.70 31 13.5 1.15 Based entirely on a subjective analysis, do you think that Walgreen is overpriced because its price/sales ratio is the highest in the industry? If it is not, how would you rationalize its value?
Choose the correct letter of answer and provide a solution. Thanks The financial ratios of a firm are as follows: Current Ratio=1.33; Acid-test ratio=0.80; Current liabilities=P40,000.00; Inventory turnover ratio=6 times. What is the sales/cost of good sold of the firm? *a. P57,200.00b. P77,200.00c. P97,20000d. P117,200.00e. P127,200.00