Chapter 1: Q28DQ (page 29)
Define and explain the return on assets.
Return on assets is the profitability ratio which is computed as net income divided by the average assets.
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Question: What type of accounting information might be useful to the marketing managers of a business?
BMW Group, one of Europe’s largest manufacturers, reports the following income statement accounts for the year ended December 31, 2015 (euros in millions).
Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . € 92,175
Cost of sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74,043
Selling and administrative costs . . . . . . . . . . . . 8,633
Other expenses . . . . . . . . . . . . . . . . . . . . . . . . . 3,103
Use this information to prepare BMW’s income statement for the year ended December 31, 2015.
The following financial statement information is from five separate companies.
Company Company Company Company Company
V W X Y Z
December 31, 2016
Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . \(54,000 \) 80,000 \(141,500 \)92,500 $144,000
Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . 25,000 60,000 68,500 51,500 ?
December 31, 2017
Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . 59,000 100,000 186,500 ? 170,000
Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . 36,000 ? 65,800 42,000 42,000
During year 2017
Stock issuances . . . . . . . . . . . . . . . . . . . 5,000 20,000 ? 48,100 60,000
Net income (or loss) . . . . . . . . . . . . . . . . ? 40,000 18,500 24,000 32,000
Cash dividends . . . . . . . . . . . . . . . . . . . 5,500 2,000 0 20,000 8,000
Required 2. Answer the following questions about Company W.
a. What is the amount of equity on December 31, 2016?
b. What is the amount of equity on December 31, 2017?
c. What is the amount of liabilities on December 31, 2017?
Identify how each of the following separate transactions 1 through 10 affects financial statements. For increases, place a “+” and the dollar amount in the column or columns. For decreases, place a “−” and the dollar amount in the column or columns. Some cells may contain both an increase (+) and a decrease (−) along with dollar amounts. The first transaction is completed as an example.
Required a. For the balance sheet, identify how each transaction affects total assets, total liabilities, and total equity. For the income statement, identify how each transaction affects net income
1 Owner invests \(800 cash in business in exchange for stock +800 +800 +800
2 Purchases \)100 of supplies on credit
3 Buys equipment for \(400 cash
4 Provides services for \)900 cash
5 Pays \(400 cash for rent incurred
6 Incurs \)200 utilities costs on credit
7 Pays \(300 cash for wages incurred
8 Pays \)50 cash for dividends
9 Provides \(600 services on credit
10 Collects \)600 cash on accounts receivable
Key financial figures for Apple’s fiscal year ended September 26, 2015, follow.
Key Figure \( Millions
Liabilities + Equity . . . . . . . . . . . \)290,479
Net income . . . . . . . . . . . . . . . . . 53,394
Revenues . . . . . . . . . . . . . . . . . . 233,715
Required 1. What is the total amount of assets invested in Apple?
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