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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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This question was answered on: Oct 24, 2017

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