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(Solution Download) Vertical analysis The condensed income statements through income from operations for Dell Inc....

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Vertical analysis

The condensed income statements through income from operations for Dell Inc. and

Apple Inc. for recent fiscal years follow (numbers in millions of    dollars):

 

 

Dell Inc.

Apple Inc.

Sales

$56,940

$156,508

Cost of sales

  44,754

  87,846

Gross profit

$12,186

$68,662

Selling, general, and administrative expenses

$  8,102

$10,040

Research and development

     1,072

    3,381

Operating expenses

$  9,174

$13,421

Income from operations

$  3,012

$55,241

 

Prepare comparative common-sized statements, rounding percents to one decimal place.  Interpret  the analyses.

 

Deere & Co. manufactures and distributes farm and construction machinery that it sells around the world. In addition to its manufacturing operations, Deere & Co.?s credit division loans money to customers to finance the purchase of their farm and construction equipment.

The following information is available for three recent years (in millions except per- share amounts):

 

 

Year 3

Year 2

Year 1

Net income (loss)

$3,064 .7

$2,799 .9

$1,865 .0

Preferred dividends

$0 .00

$0 .00

$0 .00

Interest expense

$782 .8

$759 .4

$811 .4

Shares outstanding for computing earnings per share

 

397

 

417

 

424

Cash dividend per share

$1 .79

$1 .52

$1 .16

Average total assets

$52,237

$45,737

$42,200

Average  stockholders? equity

$6,821

$6,545

$5,555

Average stock price per share

$79 .27

$80 .48

$61 .18

1.     Calculate the following ratios for each year (Round percentages to one decimal place):

a.    Rate earned on total assets

b.   Rate earned on stockholders? equity

c.    Earnings per share

d.   Dividend yield

e.    Price-earnings ratio

2.     What is the ratio of average liabilities to average stockholders? equity for Year 3?

3.     Based on these data, evaluate Deere & Co.?s performance.

 

 

 







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