Comprehensive Income
IDQ’s income statement data for the year ended November 30, 1999, is presented below (dollars in millions).
|
11/30/99 |
|
|
Net sales |
$340 |
|
Cost of goods sold |
249 |
|
Gross profit |
91 |
|
Selling, general, and administrative |
40 |
|
Income before depreciation |
51 |
|
Nonoperating income |
2 |
|
Income before tax |
53 |
|
Provisions for income tax |
20 |
|
Net income |
$ 33 |
|
Dividends |
12 |
|
Unrealized gain on securities |
10 |
|
Foreign exchange adjustement |
3 |
|
Allowance for bad debts |
13 |
Required
a. Review the annual income statement for the fiscal year ended 11/30/99. Identify any unusual items and any items that shouldn’t appear on an income statement.
b. Using the data presented, prepare a statement of comprehensive income. Evaluate and discuss the differences between the income statement as originally shown and your statement of comprehensive income.
c. Compute a vertical analysis of each income statement. Comment on any differences in the return on sales ratio as derived from each statement.
d. Using the following balance sheet data, compute each ratio, and comment on any differences in the ratios as derived from each statement.
i. Assuming average assets of $400 (million), calculate return on assets (ROA).
ii. Assuming average shareholders ‘equity of $150 (million), calculate return on equity (ROE).
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