Compute the following ratios for two years. You may use Excel to compute your ra
ID: 2732275 • Letter: C
Question
Compute the following ratios for two years. You may use Excel to compute your ratios. (all these formulas should be bases on the company you picked, in this case Under Armour) use numbers from balance sheet and income statements found online.
Debt ratio
Gross profit margin
Free cash flow
Times interest earned
Accounts receivable turnover
Inventory turnover
Prepare a DuPont Analysis of ROE for two years, including computations of
Return on Sales
Asset Turnover
Return on Assets
Financial Leverage
Return on Equity
Briefly evaluate the ratio trends. Indicate on your worksheet whether each ratio is:
stronger / weaker
quicker /slower
more / less liquid
more / less risk
Explanation / Answer
As per year ending 2015:-
Debt ratio=Current liabilities and long term liabillites/Total assets*100=(478.81+627)/2870=38.53%
Gross profit margin=Cost of goods sold/total sales*100=2.057/3.96*100=51.94%
Free cash flow=operating cashflow - capital expenditure=-44.10-298.93= -343.03
Times Interest earned=Earnings before interest and tax(EBIT)/Total interest on debt and other obligations
=401.31M/14.63M=27.4306
Accounts receivable turnover=Credit sales/Accounts receivable=not given/433.64M
Inventory turnover=Cost of goods sold/Average Inventory=2057M/783M=0.5194
Dupont analysis ROE=Profit marigin*total Asset turnover*Equity multiplier
=(profit/sales)*(Sales/assets)*Assets/Equity
=(2.01B/3.96B)*(3.96B/2.87B)*(2.87B/1.67B)=1.2036
Return on sales=EBIT/Sales=401.31M/3.96B=10.13%
Asset Turnover=Sales/assets)=3.96B/2.87B=1.3798
Return on assets=Net Income/Total Assets=232.57M/2870M=8.1%
Fianancial Leverage=EBIT/(EBIT-Interest)=401.31M/(401..31M-14.63M)=1.0378
Return on Equity=Net income/shareholders funds=232.57M/1670M=13.93%
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.