A) Google, reports net sales of $2,300,000, cost of goods sold of $1,100,000, an

Question

A) Google, reports net sales of $2,300,000, cost of goods sold of $1,100,000, and income tax expense of $132,000 for the year ended December 31, 2015. Selected balance sheet accounts are as follows:

B)

Google and Yahoo are close competitors in the Internet search engine business. One of Google’s top executives, Marissa Mayer, left Google in 2012 to become Yahoo’s CEO. Selected financial data for Google and Yahoo are as follows: (Enter your answers in millions rounded to 1 decimal place.)

Calculate the return on assets for both companies.

Calculate the cash return on assets for both companies.

Calculate the cash flow to sales ratio and the asset turnover ratio for both companies.

A) Google, reports net sales of $2,300,000, cost of goods sold of $1,100,000, and income tax expense of $132,000 for the year ended December 31, 2015. Selected balance sheet accounts are as follows:

Explanation / Answer

Answer 1. Cash received from Customers Net Sales          2,300,000 Add: Accounts Receivables -2014              221,000 Less: Accounts receivable - 2015            (267,000) Cash received from Customers          2,254,000 Calculation of cash Paid to Suppliers Cost of Goods Sold          1,100,000 Add: Closing Inventory              116,000          1,216,000 Less: opening Inventory            (147,000) Purchases made during the year          1,069,000 Add: Opening Accounts Payable              119,000 Total amount Due          1,188,000 Less: Closing Accounts Payable            (111,000) Cash payment to Suppliers          1,077,000 Calculation Of Cash paid for Income taxes Income Tax expense              132,000 Add: Opening Tax Payable                14,200 Less: Closing Tax Payable              (16,000) Cash paid for Income Taxes              130,200 Answer 2. 1. Return on Assets = Net Profit / Average Total Assets Average Assets = (Opening Balance + Closing Balance)/2 ($ in Millions) Google Yahoo Net Income (A)                12,975            1,929 Total Assets, Beginning                68,905          18,684 Total Assets, Ending                70,905          18,384 Average Assets (B)                69,905          18,534 Return On Assets (A/B) 18.56% 10.41% Answer 2. 2. Cash return on Assets = Operating Cash Flow / Average Total assets ($ in Millions) Google Yahoo Operating Cash Flow(A)                16,365            2,150 Total Assets, Beginning                68,905          18,684 Total Assets, Ending                70,905          18,384 Average Assets (B)                69,905          18,534 Cash Return On Assets (A/B) 23.41% 11.60% Answer 2. 3. Cash Flow to Sales Ratio = Operating Cash Flow / Net sales ($ in Millions) Google Yahoo Operating Cash Flow(A)                16,365            2,150 Net Sales (B)                49,905            9,184 Cash Flow to sales Ratio (A/B) 32.79% 23.41% Answer 2. 4. Assets Turnover ratio = Net Sales / Average Total Assets ($ in Millions) Google Yahoo Net Sales (A)                49,905            9,184 Total Assets, Beginning                68,905          18,684 Total Assets, Ending                70,905          18,384 Average Assets (B)                69,905          18,534 Assets Turnover Ratio (A/B)                     0.71              0.50

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