Chapter 9



ThomsonONE cases

Gibson, Financial Reporting & Analysis: Using Financial Accounting Information, 13e

Chapter 9

I. Enter MRK in “Companies” (Merck & Company, Inc.). Click “Go”. Review the business description, industry, and sector. Click on “Estimates.” Click on “Thomson Estimates Tearsheet”.

Required

a. Review the EPS estimate forecasts. Comment on how those forecasts could influence the market value of the common stock.

Click “Prices”. Under the heading “Fundamentals”, select the forward price/earnings ratio (PE).

b. 1. What is the forward price/earnings ratio for Merck & Company, Inc.?

2. Comment on how the price/earnings ratio is influenced by the earnings per share forecasts.

a. 1. Toward the top of the page, view “Market Capitalization” Note how it is computed.

2. Go back to “Thomson Full Reports”. Click “Annual Ratios Section”. Under the heading “Leverage Ratios”, select the dividend payout. Comment on the dividend payout.

Click “Financials”. Under “Financial Statements” select “Thomson Financials”. Click “Financial Summaries”. Click “Annual Financial Summary”. Select the most recent year total shareholder equity.

b. Why is the market capitalization different than the total shareholder equity?

I. In this part, comparisons are made between Apple Computer (AAPL), Dell Computer (DELL), and Hewlett-Packard (HPQ).

Required

a. For each of these companies, follow the directions in 1a.

b. For each of these companies, follow the directions in 1, b 1, 2.

c. For each of these companies, follow the directions in 1, c, 1, 2.

d. For each of the companies, follow the directions in 1, d.

e. Using “Financials”, “Financial Ratios”, “Thomson Ratios”, “Annual Ratios”, compare the firms using the profitability ratios. Determine the following profitability ratios for these firms:

1. Return on assets

2. Gross profit margin

3. Net margin

f. Compare these ratios for these firms.

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