The following information is available for three recent years (in millions except per-share
amounts):2004 2003 2002
Net income (loss) $3,487 $495 $(980)
Preferred dividends $0 $0 $15
Shares outstanding for computing earnings
per share 1,830 1,832 1,819
Cash dividend per share $0.40 $0.40 $0.40
Average total assets $308,032 $293,678 $277,037
Average stockholders’ equity $13,848 $8,532 $6,511
Average stock price per share $14.98 $11.95 $12.56- Calculate the following ratios for each year, rounding to one decimal place.
a. Rate earned on total assets
b. Rate earned on stockholders’ equity
c. Earnings per share
d. Dividend yield (use average stock price)
e. Price-earnings ratio (use average stock price) - Calculate the leverage formula for 2004.
- Why does Ford have so much leverage?
- Explain the direction of the dividend yield and price-earnings ratio in light of Ford’s prof-
itability trend.
Cinemark USA Inc.is one of the largest exhibitors of motion pictures in the United States. The
condensed liabilities and stockholders’ equity portion of Cinemark’s balance sheet for the end
of a recent year is as follows (in millions):Total current liabilities $ 128.9
Long-term debt 687.1
Other items 16.7
Total liabilities $ 832.7
Stockholders’ equity (deficit):
Common stock $ 49.5
Additional paid-in capital 51.1
Accumulated other comprehensive loss (77.1)
Retained earnings 169.6
Treasury stock (24.2)
Total stockholders’ equity $ 168.9
Total liabilities and stockholders’ equity $1,001.6Additional information:
Total assets, beginning of year: $960.7
Total stockholders’ equity, beginning of year: $76.8Cinemark’s income statement for a recent year-end was as follows:Revenues:
Admissions $ 647.0
Concession 321.6
Other 55.6
Total revenues $1,024.2
Costs and expenses:
Cost of operations:
Film rentals and advertising $ 348.8
Concession supplies 53.8
Salaries and wages 103.1680 Chapter 14 Financial Statement Analysis
Case 14-4
Profitability and leverage
analysis