Chapter Two - Wiley
Chapter Two - Wiley
Chapter Two - Wiley
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8956d_ch02.qxd 7/17/03 2:41 PM Page 96 mac34 Mac34: kec_420:<br />
96 CHAPTER 2 A Further Look at Financial Statements<br />
Target Wal-Mart<br />
Balance Sheet Data (End of Year)<br />
Current assets $ 7,304 $ 26,555<br />
Noncurrent assets 12,186 51,575<br />
Total assets $19,490 $ 78,130<br />
Current liabilities $ 6,301 $ 28,949<br />
Long-term debt 6,670 17,838<br />
Total stockholders’ equity 6,519 31,343<br />
Total liabilities and stockholders’ equity $19,490 $ 78,130<br />
Average shares outstanding 904 4,465<br />
Year-end share price $ 36.97 $ 56.80<br />
Preferred stock dividends paid –0– –0–<br />
Instructions<br />
For each company, compute these values and ratios.<br />
(a) Working capital.<br />
(b) Current ratio.<br />
(c) Debt to total assets ratio.<br />
(d) Earnings per share.<br />
(e) Price-earnings ratio.<br />
(f) Compare the liquidity, solvency, and profitability of the two companies.<br />
BROADENING YOUR PERSPECTIVE<br />
Financial Reporting and Analysis<br />
FINANCIAL REPORTING PROBLEM: Tootsie Roll Industries, Inc.<br />
BYP2-1 The financial statements of Tootsie Roll Industries, Inc., are presented in Appendix<br />
A at the end of this book.<br />
Instructions<br />
Answer the following questions using the Consolidated Balance Sheet and the Notes to<br />
Consolidated Financial Statements section.<br />
(a) What were Tootsie Roll’s total current assets at December 31, 2002, and December<br />
31, 2001?<br />
(b) Are the assets included in current assets listed in the proper order? Explain.<br />
(c) How are Tootsie Roll’s assets classified?<br />
(d) What were Tootsie Roll’s current liabilities at December 31, 2002, and December 31,<br />
2001?<br />
COMPARATIVE ANALYSIS PROBLEM: Tootsie Roll vs. Hershey Foods<br />
BYP2-2 The financial statements of Hershey Foods are presented in Appendix B, following<br />
the financial statements for Tootsie Roll in Appendix A. Hershey’s year-end stock<br />
price was $67.44, Tootsie Roll’s was $30.68. Hershey’s average number of shares outstanding<br />
was 136,538,000, and Tootsie Roll’s was 51,553,000.<br />
Instructions<br />
(a) For each company calculate the following values for 2002.<br />
(1) Working capital. (4) Earnings per share.<br />
(2) Current ratio. (5) Price-earnings ratio.<br />
(3) Debt to total assets ratio
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