Given below is summary information from DuPont's income statement for the last three years (in millions). 2016 2015 2014 Sales 24594 25130 28406 Income from Continuing Operations 2521 1895 3145 Gains from disposal of Discontinued Business -5 86 476 Net Income 2525 1959 3636 Translation Adjustment -510 -1605 -876 Minimum Pension Liability Adjustment 323 574 -2199 Unrealized Gains on Marketable Securities 0 1 -2 Comprehensive Income 2010 651 371 a. Calculate return on sales using (1) income from continuing operations (ICO / Sales); (2) net income (NI / Sales); and (3) comprehensive income (CI / Sales). 2016 2015 2014 ICO / Sales NI / Sales CI / Sales

Solution and Explanation:

                           201620152014

ICO/Sales    

ICO                    252118953145

Sales             245942513028406

ICO/Sales10.25%7.54%11.07%

NI/Sales  

NI               2525       1959         3636

Sales    24594       2513028406

NI/Sales    10.27%     7.80%       12.80%

CI/Sales  

CI          2010651           371

Sales245942513028406

CI/Sales8.17%2.59%1.31%

b. If the gain realized from selling the segment is reported as a separate line item, it has no impact on Incomes. It is shown separately for clear understanding to the intended users. However, the figures of Comprehensive income, Net income and Income from continuing operations will not be affected (except for the difference in amounts).

If the gain is 3866 in 2016, ICO/Sales would remain same at 10.25%.

NI/Sales would vary because of increase in the gain.

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