Use the financial statements on the next page to answer Compute the following fi
ID: 2755951 • Letter: U
Question
Use the financial statements on the next page to answer
Compute the following financial ratios for the two years 2013, 2014
1. Total Asset Turnover
2. Fixed Asset Turnover
3. Inventory Turnover
4. Average collection period.
5. Current Ratio
6. Quick (Acid Test)
7. Cash ratio
8. Market-to-Book
9. P/E ratio
10. ROE
10. Decompose the ROE for the two years into:
Tax Burden, Interest Burden, Margin, Turnover, Leverage, Compound Leverage and ROA
Write a short note on the financial health of the company.
Income Statement
2012
2013
2014
Sales Revenues
130,000
150,000
COGS (including Depreciation)
85,800
105,000
Depreciation
20,000
25,000
S&A Expenses
15,000
18,000
Operating Income
29,200
27,000
Interest Expense
12,000
15,000
Taxable Income
17,200
12,000
Income Tax (40%)
6,880
4,800
Net Income
10,320
7,200
Balance Sheet
2007
2008
2009
Cash & MS
20,000
30,000
28,000
Accounts Receivable
40,000
50,000
60,000
Inventories
75,000
80,000
100,000
Net PPE
120,000
140,000
160,000
Total Assets
255,000
300,000
348,000
Liabilities
Accounts Payable
50,000
60,000
85,000
Short-term Debt
45,000
72,000
85,000
LT Debt (8% Bonds)
75,000
74,000
80,000
Total Liabilities
170,000
206,000
250,000
Shareholders Equity
85,000
94,000
98,000
Price per share
$ 85.00
$ 77.00
No of shares
10,000
10,000
10,000
Dividends Paid
1,320
3,200
Income Statement
2012
2013
2014
Sales Revenues
130,000
150,000
COGS (including Depreciation)
85,800
105,000
Depreciation
20,000
25,000
S&A Expenses
15,000
18,000
Operating Income
29,200
27,000
Interest Expense
12,000
15,000
Taxable Income
17,200
12,000
Income Tax (40%)
6,880
4,800
Net Income
10,320
7,200
Balance Sheet
2007
2008
2009
Cash & MS
20,000
30,000
28,000
Accounts Receivable
40,000
50,000
60,000
Inventories
75,000
80,000
100,000
Net PPE
120,000
140,000
160,000
Total Assets
255,000
300,000
348,000
Liabilities
Accounts Payable
50,000
60,000
85,000
Short-term Debt
45,000
72,000
85,000
LT Debt (8% Bonds)
75,000
74,000
80,000
Total Liabilities
170,000
206,000
250,000
Shareholders Equity
85,000
94,000
98,000
Price per share
$ 85.00
$ 77.00
No of shares
10,000
10,000
10,000
Dividends Paid
1,320
3,200
Explanation / Answer
Overall financial health of the firm is average as some components are improving and some are decreasing but not much. So firm has huge potential to grow.
2013 2014 sales/Average total assets 0.23 0.16 Sales/Average fixed assets 1.00 1.00 COGS/Average inventory 1.11 1.17 365/Accounts receivable 126.35 133.83 Current assets/Current Liabilities 1.21 1.11 (Current assets-Inventory)/Current Liabilities 0.61 0.52 Cash/Current liabilities 0.23 0.16 Market value per share/Book value per share 0.90 0.79 Market price per share/Earnings per share 82.36 106.94 Net income/Average Shareholder equity 0.12 0.08 EPS Net Income/ outstanding share 1.03 0.72 0.00 ROE = Tax burden x Interest burden x Margin x Turnover x Leverage 0.06 0.02Related Questions
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