3 The balance sheet in Table P2.4 summarizes the financial conditions for Flex I
ID: 2338472 • Letter: 3
Question
3 The balance sheet in Table P2.4 summarizes the financial conditions for Flex Inc., an electronic outsourcing contractor, for fiscal-year 2009. Compute the various financial ratios and interpret the firm's financial health during fiscal-year 2009. Note that the balance sheet and the income statement entries in this problem are not complete. Only relevant entries are listed. Do not attempt to add individual entries to confirm either current assets or current liabilities. (a) Debt ratio (b) Times-interest-earned ratio (c) Current ratio (d) Quick (acid-test) ratio (e) Inventory turnover ratio (f) Day's sales outstanding (g) Total assets turnover (h) Profit margin on sales (i) Return on total assets () Return on common equity (k) Price-to-carnings ratio. Assume a stock price of USS100 per share. (1) Book value per share. Assume that 150,250,000 shares were outstanding.Explanation / Answer
1 Debt Ratio 0.31 2 Times interest Earned 25.00 3 Current Ratio 3.33 4 Quick Ratio 2.54 5 Inventory Turnover 7.50 6 Days in Inventory 48.67 7 Total Asset turnover 1.45 8 Profit Margin on sales 0.10 9 Return on total sales 0.10 10 Return on common equity 0.51 11 Price-to-earning ratio 83.33 12 Book value per share 0.01 1 Total Debt /Total assets (1400000/4500000) 0.31 2 Operating Profit before interest / Interest(1250000/50000) 25 3 4000000/1200000 3.33 4 4000000 -950000 /1200000 2.54 5 Cost of Goods Sold / Avg Inventory(6000000/(950000+650000/2) 7.50 6 365 / inventory Turn over 48.67 7 Cost of goods sold / Average Total Assets(6000000/(4500000+3800000/2) 1.45 8 Net Income / Sales 960000/10000000 0.10 9 Net Income / Sales 960000/10000000 0.10 10 Net Income / Common stock 960000/1900000 0.51 11 MPS / EPS 83.33 12 Asset -liability / no of shares (4500000-1200000-1400000)/150250000 0.01
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