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Compare and contrast Apple to G.E. FOR EACH of the ratios below:

Apple Inc.

Balance Sheet: Debt to asset ratio = 0.59% Debt to equity ratio = 1.43%

Coverage ratio: Times interest earned = 99.93 times

​Leverage ratio: Market value of total debt / value of equity = 54% Market value of total debt / value of assets = 22.19%

Liquidity ratio: Current ratio = 1.11% Acid test ratio = 1.08%

ROIC: Return on Invested Capital = -3.96%

General Electric Co.

Balance Sheet: Debt to asset ratio = .80% Debt to equity ratio = 4.01%

Coverage ratio: Times interest earned = 4.87 times

Leverage ratio: Market value of total debt / value of equity = 20.17% Market value of total debt / value of assets = .40%

​Liquidity ratio: Current ratio = 1.61% Acid test ratio = 1.22%

​ROIC: Return on Invested Capital = 1.24%

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Elin Hessel
Elin HesselLv2
28 Sep 2019

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Related questions

Calculate and discuss the importance of the following ratios:

Liquidity Ratios—working capital, current ratio, quick/acid-test ratio, receivable turnover, average day's sales uncollected, inventory turnover, average day's inventory on hand, operating cycle

Profitability Ratios—profit margin, asset turnover, return on assets, debt-to-equity ratio, return on equity

Long-term Solvency Ratios—debt-to-equity ratio, debt to total assets, times interest earned, cash debt coverage

Cash Flow Ratios—cash flow yield, cash flows to sales, cash flows to assets, free cash flow

Market Strength Ratios—Earnings per share, price-earnings per share, payout ratio, book value per share

Use the following information to answer the following questions.

ABC, Inc. Income Statement (in thousands)

December 31, 2014

Sales $200,000

Cost of goods sold 140,000

Gross profit on sales 60,000

Operating expenses 56,000

Operating income (EBIT) 4,000

Interest expense 1,000

Earnings before tax 3,000

Income tax 1,050

Net income available to common stockholders $1,950

Number of shares outstanding 1, 500

Market price per share $22

ABC, Inc. Balance Sheet (in thousands)

December 31, 2014

Assets

Cash $2,000

Accounts receivable 17,800

Inventories 8,700

Total current assets 28,500

Gross fixed assets 70,000

Accumulated depreciation 26,500

Net fixed assets 43,500

Total assets $72,000

Liabilities and Equity

Accounts payable $18,000

Accruals 13,350

Total current liabilities 31,350

Long-term debt 8,250

Total liabilities 39,600

Common stock (par value and paid in capital) 2,000

Retained earnings 30,400

Total stockholders' equity 32,400

Total liabilities and equity $72,000

Industry Key Ratios

Industry Average Ratios

Current ratio 1.1

Quick ratio 0.60

Days Sales Outstanding (DSO) 25 days

Fixed assets turnover 5.8

Total asset turnover 2.95

Liabilities-to-assets ratio 65%

Times-interest-earned 3.2

Net profit margin 1.3%

Return on equity 7.32%

Price/earnings ratio 20.38

Market/book ratio 3.19

Calculate current ratio and acid test ratio for the firm.

Calculate DSO, fixed assets turnover, and total asset turnover for the firm.

Calculate liabilities-to-assets ratio and times-interest-earned ratio for the firm.

Calculate net profit margin and return on equity for the firm.

Evaluate the performance of the firm in the following areas:

Liquidity management

Asset management

Debt management

Profitability management

When you explain the firm

Financial Ratios Competitive Comparison
Liquidity (Balance Sheet) Calculations Starbucks Yum!
2010 2009 2008 2010 2010
Current Ratio 1.49 1.14 1.39 1.55 0.94
Quick or Acid Test 1.22 0.96 1.18 0.98 0.69
Inventory to net working capital 0.08 0.25 0.11 0.56 -1.4
Activity (Balance Sheet)
2010 2009 2008
Inventory turnover 219.06 214.17 210.96 8.21 42.96
Fixed asset turnover 1.09 1.06 1.16 4.43 2.96
Total Asset Turnover 0.75 0.75 0.83 1.68 1.36
Leverage (Balance Sheet)
2010 2009 2008
Debt to Assets Ratio 0.36 0.35 0.36 0.08 0.35
Long-term debt to equity ratio 0.79 0.75 0.76 0.15 2.28
Debt to equity 1.18 1.15 1.13 0.74 3.98
Times-interest earned ratio 16.53 14.71 12.78 44.94 9.17
Profitability (Income Statement)
2010 2009 2008
Gross profit Margin 0.40 0.39 0.37 0.58 0.16
Operating profit margin 0.31 0.31 0.28 0.13 0.15
Net Profit margin 0.21 0.20 0.18 0.08 0.1
Return on total assets 0.15 0.15 0.15 0.15 0.14
Return on equity 0.34 0.32 0.32 0.26 0.73

Using the above McDonalds financial information, prepare a common size income statement where all data is expressed as a percentage of revenues. Be sure to discuss the year-by-year trends that are significant, the overall financial situation of the organization, any areas of company operations that might need immediate management attention, and any areas that seem particularly strong.

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