using the financial statements of landry's restaurant located in appendix a of the text fundamentals of financial accounting 1st ed by phillips libby and libby compute the following ratios for 2002 and 2003
a. Return on Equity
b. Inventory Turnover
I cannot locate in Appendix A and need to figure these ratios. Can you help?
Sure, I'd be happy to help you compute the ratios for Return on Equity (ROE) and Inventory Turnover for Landry's Restaurant for the years 2002 and 2003. Since you mentioned that you cannot locate the financial statements in Appendix A, I'll guide you through the process of calculating these ratios using the available information.
To calculate Return on Equity (ROE), we need two components: Net Income and Average Shareholders' Equity.
1. Net Income: Look for the Net Income figures for both 2002 and 2003 on the Income Statement or Statement of Operations. Net Income represents the profit earned by the company during a specific period.
2. Average Shareholders' Equity: Locate the figures for Shareholders' Equity or Owners' Equity on the Balance Sheet for both 2002 and 2003. Add the Shareholders' Equity figures for the beginning and end of each year and divide the sum by 2 to obtain the average.
Once you have the Net Income and Average Shareholders' Equity for both years, you can compute the ROE using the following formula:
ROE = (Net Income / Average Shareholders' Equity) x 100
To calculate the Inventory Turnover ratio, we need two components: Cost of Goods Sold (COGS) and Average Inventory.
1. Cost of Goods Sold (COGS): Look for the COGS figure on the Income Statement for both 2002 and 2003. COGS represents the direct costs associated with producing the goods or services sold by the company.
2. Average Inventory: Locate the figures for Inventory on the Balance Sheet for both 2002 and 2003. Add the Inventory figures for the beginning and end of each year and divide the sum by 2 to obtain the average.
Once you have the COGS and Average Inventory figures for both years, you can compute the Inventory Turnover ratio using the following formula:
Inventory Turnover = COGS / Average Inventory
These formulas will help you calculate the ratios for Return on Equity and Inventory Turnover for Landry's Restaurant in 2002 and 2003.