Monday, May 11, 2009

Accounting question?

Thunder Corporation and Lightning Corporation, two corporations of roughly the same size, are both involved in the manufacture of umbrellas. Each company depreciates its plant assets using the straight-line approach. An investigation of their financial statements reveals the following information.





Thunder Corp./ Lightning Corp.


Net income $ 800,000/ $1,000,000


Sales 1,600,000/ 1,300,000


Total assets (average) 2,500,000/ 1,700,000


Plant assets (average) 1,400,000/ 1,200,000


Intangible assets (goodwill) 600,000/ 0





For each company, calculate these values:





Return on assets ratio. (Round to 0 decimal places.)


Thunder % ?


Lightning % ?





how do you round to 0 decimal places?

Accounting question?
Thunder = 800,000/2500000 = 32%


Lightning = 1,000,000/1700000= 59%
Reply:You round to 0 decimal places by rounding to whole dollars.


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