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lilacmink742Lv1
29 Sep 2019
Calculate and discuss the importance of the following ratios:
Liquidity Ratiosâworking 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 Ratiosâprofit margin, asset turnover, return on assets, debt-to-equity ratio, return on equity
Long-term Solvency Ratiosâdebt-to-equity ratio, debt to total assets, times interest earned, cash debt coverage
Cash Flow Ratiosâcash flow yield, cash flows to sales, cash flows to assets, free cash flow
Market Strength RatiosâEarnings per share, price-earnings per share, payout ratio, book value per share
Calculate and discuss the importance of the following ratios:
Liquidity Ratiosâworking 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 Ratiosâprofit margin, asset turnover, return on assets, debt-to-equity ratio, return on equity
Long-term Solvency Ratiosâdebt-to-equity ratio, debt to total assets, times interest earned, cash debt coverage
Cash Flow Ratiosâcash flow yield, cash flows to sales, cash flows to assets, free cash flow
Market Strength RatiosâEarnings per share, price-earnings per share, payout ratio, book value per share
Beverley SmithLv2
29 Sep 2019
Related questions
| E13-5 Matching Each Ratio with Its Computational Formula LO 13-4, 13-5, 13-6, 13-7 | |||||||
| Match each definition with its related ratios or percentages by selecting the appropriate letter in the drop down provided. | |||||||
| Definitions: | Ratios or Percentages | Definitions | |||||
| A. | Net Income (before extraordinary items) ÷ Net Sales | 1 | Profit margin | ||||
| B. | Days in Year ÷ Receivable Turnover ratio | 2 | Inventory turnover ratio | ||||
| C. | Net Income ÷ Average Stockholdersâ Equity | 3 | Average collection period | ||||
| D. | Net Income ÷ Average Number of Shares of Common Stock Outstanding | 4 | Dividend yield ratio | ||||
| E. | Return on Equity â Return on Assets | 5 | Return on equity | ||||
| F. | Quick Assets ÷ Current Liabilities | 6 | Current ratio | ||||
| G. | Current Assets ÷ Current Liabilities | 7 | Debt-to-equity ratio | ||||
| H. | Cost of Goods Sold ÷ Average Inventory | 8 | Price/earnings ratio | ||||
| I. | Net Credit Sales ÷ Average Net Receivables | 9 | Financial leverage percentage | E | |||
| J. | Days in Year ÷ Inventory Turnover Ratio | 10 | Receivable turnover ratio | ||||
| K. | Total Liabilities ÷ Stockholdersâ Equity | 11 | Average daysâ supply of inventory | ||||
| L. | Dividends per Share ÷ Market Price per Share | 12 | Earnings per share | ||||
| M. | Market Price per Share ÷ Earnings per Share | 13 | Return on assets | ||||
| N. | [Net Income + Interest Expense (net of tax)] ÷ Average Total Assets | 14 | Quick ratio | ||||
| O. | Cash from Operating Activities (before interest and taxes) ÷ Interest Paid | 15 | Times interest earned | ||||
| P. | Net Sales Revenue ÷ Net Fixed Assets | 16 | Cash coverage ratio | ||||
| Q. | (Net Income + Interest Expense + Income Tax Expense) ÷ Interest Expense | 17 | Fixed asset turnover ratio | ||||
| Millions of USD (except for per share items) | 2015 | 2014 | |
| Sales | $ 114,826 | $ 114,960 | |
| Cost of Goods Sold | 86,483 | 86,714 | |
| Gross Profit | 28,343 | 28,246 | |
| Selling/General/Admin. Expenses, Total | 22,663 | 22,053 | |
| Operating Income | 5,680 | 6,193 | |
| Interrest and Taxes | 2,336 | 2,600 | |
| Net Income | $ 3,344 | $ 3,593 | |
| Market Price/Share | $ 65.68 | $ 84.26 | |
| Shares Outstanding | 3,210 | 3,210 |
| Millions of USD (except for per share items) | As of 2015 | As of 2014 |
| Cash & Equivalents | $ 7,759 | $ 6,012 |
| Total Receivables, Net | 5,813 | 6,096 |
| Total Inventory | 46,310 | 45,315 |
| Prepaid Expenses | 2,251 | 1,811 |
| Total Current Assets | 62,133 | 59,687 |
| Property/Plant/Equipment, Total - Gross | 138,614 | 142,830 |
| Total Assets | $ 200,747 | $ 202,517 |
| Accounts Payable | 37,224 | 36,347 |
| Accrued Expenses | 18,685 | 17,807 |
| Notes Payable/Short Term Debt | 799 | 3,517 |
| Current Port. of LT Debt/Capital Leases | 6,468 | 3,566 |
| Other Current liabilities, Total | 6,448 | 6,684 |
| Total Current Liabilities | 69,624 | 67,921 |
| Total Long Term Debt | 42,964 | 48,233 |
| Deferred Income Tax | 8,169 | 8,164 |
| Minority Interest | 3,416 | 5,111 |
| Total Liabilities | 124,173 | 129,429 |
| Total Equity | 76,574 | 73,088 |
| Total Liabilities & Shareholders' Equity | 200,747 | 202,517 |
| - | - | |
| Total # Common Shares Outstanding | $ 3,227 | $ 3,230 |
| Category | Two Ratios from Each Category | Ratio | Formula | 2015 | 2014 | |
| Liquidity | Current and Quick Ratio | Current | Current Assests/Current Liabilites | |||
| Quick | (CA - Inventories)/Current Liabilites | |||||
| Asset Management | Total Assets Turnover, Total Fixed Asset Turnover | Total Assets Turnover, | Sales/Total Assets | |||
| Total Fixed Asset Turnover | Sales/Total Fixed Assets | |||||
| Debt Management | Debt to Assets and Debt to Equity | Debt to Assets | Total Liabilities / Total Assests | |||
| Debt to Equity | Total Liabilities / Common Stockholders Equity | |||||
| Profitability Ratio | Return on Assets and Return on Equity | Return on Assets | Net Income/Total Assets | |||
| Return on Equity | Net Income/Common Equity | |||||
| Market Ratio | Earnings Per Share and Price to Earnings Ratio | Earnings Per Share | Net Income / Common Shares Outstanding | |||
| Price to Earnings Ratio | Market Price of Shares/Earning Per Share |
