Financial Ratios

Use the annual information found that can be found by clicking here to answer this assignment. Calculate the following asset activity ratios for the end of 2005:

FIN410 Unit 2 Individual Project #2
ABC Fitness 000’s
Income Statement Dec-05
Sales 2004.016
Cost of Goods Sold 1446.733
Gross Profit 557.283
Selling and Ad
Expenses 361.402
Depreciation 56.87
Operating Income
(EBIT) 139.011
Interest expense 34.482
Other Expense 14.124
EBT 90.405
Taxes 24.701
Net Income 65.704
Balance Sheet
Assets
Cash 25.32
Net Receivables 55.514
Inventories 141.35
Prepaids 8.775
Total Current Assets 230.959
Gross Plant &
Equipment 536.74
Accumulated
Depreciation (161.7)
Net Plant &
Equipment 507.34
Other Assets 4.621
Total Assets 1117.96
Liabilities
Notes Payable 1.127
Accounts Payable 144.638
Taxes Payable 16.797
Accrued Expense 98.233
Total Current Liabilities 260.795
Long-Term Debt 415.138
Deferred Taxes 20.396
Total Liabilities 696.329
Equity
Common Stock 0.32
Capital Surplus 242.843
Retained Earnings 178.468
Total Equity 421.631
Total Liabilities and
Equity 1117.96

1. Average Collection Period
2. Inventory Turnover
3. Total Asset Turnover
To receive full credit on this assignment, please show all work, including formulae and calculations used to arrive at financial values.
Please submit your assignment.

Financial Ratios

More with financial ratios. Need to answer only 3 questions of your choice.
Please see attached file for full problem description.

a. Is it becoming easier for the company to pay its bills as they come due?
b. Are customers paying their accounts at least as fast now as they were in Year I?
c. Is the total of accounts receivable increasing, decreasing, or remaining constant?
d. Is the level of inventory increasing, decreasing, or remaining constant?
e. Is the market price of the company’s stock going up or down?
f. Is the earnings per share increasing or decreasing?
g. Is the price-earning ratio going up or down?
h. Is the company employing financial leverage to the advantage of its common stockholders?

Financial ratios

The following information is available from the annual reports of Lucky Company and Broke Company

Lucky Broke

Sales 26,510 34,512
Gross profit 6610 8887
Net Income 565 1271
Current assets 11712 28447
Beginning total assets 17102 33138
Ending total assets 22,080 36167
Current Liabilities 7966 14950
Total Liabilities 16136 31,222
Average common shares outstanding 125 240
Preferred stock dividends paid 0 0

Instructions

(a) For each company, compute the following ratios:
1. Current ratio
2. Debt to total assets ratio
3. Earnings per share

(b) Based on your calculations, discuss the relative liquidity, solvency, and profitability of the two companies.

Financial Ratios

Solve for the following ratios.
See attached file.

Current ratio
Acid test
Receivables turnover
Inventory turnover

2.
Profit Margin
Asset Turnover
Return on Assets
Return on Equity.

Financial Ratios

Please show me how to calculate the following financial ratios using Best Buy’s income statement and balance sheets.

Profit Margin
Asset turnover
Current Ratio
Debt-Equity Ratio
PE Multiple
ROE (Return on Equity)

I am using the company/s most recent annual data, ending March 3, 2012 which can be accessed on pages 11-12 at: http://phx.corporate-ir.net/phoenix.zhtml?c=83192&p=irol-newsArticle&ID=1678071&highlight=
I have also attached the PDF of this info.

Financial Ratios

I need to identify four financial ratios and state what they tell me about a firm and why it’s important to understand what they mean to a bank or an investor. I need to include reasoning.

I am not discussing overall categories such as Liquidity, Activity, Debt, Profitability and Market Ratios.
I need to discuss specifics within each category. For example, under Liquidity category, there is current ratio & Quick(acid test) ratio.
Under debt ratio category there is Times interest earned ratio & fixed payment ratio

Market ratio category P/E ratio, Market/ Book Ratio.
Activity Ratio Category: Inventory Turnover. Average Collection Period, average payment period.
Profitability Ratio category: gross profit margin. operating profit margin & net profit margin.

I don’t need to discuss all the ratios just Four. I am not sure which ones are the most important ones to banks and investors and why. They all seem important to me.
Perhaps you could give me your expert opinion on which “specific” financial ratios would tell me about the financial health of a firm.

Financial ratios

The following data are taken from the financial statements of R. Reid Company. The average number of shares of common outstanding for the year was $10,000. The following data are in the alphabetical order:

A/P $25,000
A/R 76,000
Cash 34,000
Gross Profit 185,000
Net income 60,000

Net sales $400,000
Other current liabilities 15,000
Salaries payable 4,000
Stock holder’s equity 114,000
Total assets 285,000

Instructions
Compute the following:
(1) Current ratio
(2) Debt to total assets ratio
(3)Earnings per share
(4) working capital

Financial Ratios

Financial Ratios:

Given below are comparative balance sheets and an income statement for the Richmond Corporation…Please see attachment for table

All sales were made on account. Cash dividends declared during the year totaled $57, 150. Compute the following:

a) Average accounts receivable turnover
b) Average inventory turnover
i) Return on assets
j) Return on common stockholders’ equity

Please see attachment for all questions

Financial Ratios

An example on how to Prepare an Excel worksheet using the attaching information to perform a comparison between the two years for this company.by linking cells and formulas. A comparison to explain what the ratio means and what the difference between the two numbers, this info will work like we are telling the investors about using ratios below:

1. Current Ratio
2. Acid-test Ratio
3. Inventory Turnover
4. Return on Sales
5. Earnings per Share of Common Stock
6. Return on Total Assets
7. Rate of Return on Stockholders’ Equity
8. Asset Turnover

financial ratios

Please explain why financial ratios are more meaningful for financial analysis than individual entries.

Financial Ratios

Based on the information below compute the following ratios for 2008. Please explain each answer.

2008 2007
cash 333,000
A/R (net) 380,000 316,000
Merch Inv 275,000 225,000
marketable Securities 325,000
fixed assets 275,000
Accum depreciation 117,000

A/P 325,000
Unearned rent 18,000
bonds payable 874,000

net sales on act 1,475,000
COGS 750,000

net income 380,000
preferred dividends 35,000
market price per share 60 common
shares common outstand 37,000
common stock dividends 137,500

ratios needed

working capital
acid test ratio
accounts receivable turnover
# days sales in inventory
earnings per share on common stock
dividend per common share of stock
price-earnings ratio

Financial Ratios

Please calculate the financial ratios for 2010, 2009, and 2008.

See attached file for better formatting.

Assets Dec 2010 Dec 2009 Dec 2008 Dec 2007 Dec 2006
Current Assets
Cash 1,735.00 1,978.00 2,122.00 3,406.00 1,827.00
Net Receivables 15,079.00 15,840.00 9,782.00 10,460.00 9,906.00
Inventories Assets 8,405.00 12,403.00 4,381.00 5,302.00 6,111.00
Other Current Assets 35,249.00 31,449.00 26,791.00 27,681.00 29,105.00
Total Current Assets 60,468.00 61,670.00 43,076.00 46,849.00 46,949.00
Net Fixed Assets 19,123.00 22,780.00 13,287.00 15,734.00 16,632.00
Other Noncurrent Assets 115,423.00 128,499.00 54,785.00 52,685.00 51,256.00
Total Assets ($ Million) 195,014.00 212,949.00 111,148.00 115,268.00 114,837.00
Liabilities Dec 2010 Dec 2009 Dec 2008 Dec 2007 Dec 2006
Current Liabilities
Accounts Payable 4,026.00 4,370.00 1,751.00 2,270.00 2,019.00
Short-Term Debt 5,623.00 5,469.00 9,320.00 5,825.00 2,434.00
Other Current Liabilities 18,960.00 27,386.00 15,938.00 13,740.00 16,936.00
Total Current Liabilities 28,609.00 37,225.00 27,009.00 21,835.00 21,389.00
Long-Term Debt 38,410.00 52,193.00 7,963.00 7,314.00 5,546.00
Other Noncurrent Liabilities 40,182.00 33,517.00 18,620.00 21,109.00 16,544.00
Total Liabilities 107,201.00 122,935.00 53,592.00 50,258.00 43,479.00
Shareholder’s Equity Dec 2010 Dec 2009 Dec 2008 Dec 2007 Dec 2006
Preferred Stock Equity 52.00 61.00 73.00 93.00 141.00
Common Stock Equity 87,761.00 89,953.00 57,483.00 64,917.00 71,217.00
Total Equity 87,813.00 90,014.00 57,556.00 65,010.00 71,358.00
Shares Outstanding 8,012.00 8,070.00 6,742.94 6,829.81 7,210.44

Dec 2010 Dec 2009 Dec 2008 Dec 2007 Dec 2006
Revenue 67,809.00 50,009.00 48,296.00 48,418.00 48,371.00
Cost of Goods Sold 16,279.00 8,888.00 8,112.00 11,239.00 7,640.00
Gross Profit 51,530.00 41,121.00 40,184.00 37,179.00 40,731.00
Gross Profit Margin (%) 76.00% 82.00% 83.00% 77.00% 84.00%
SG&A Expense 19,614.00 14,875.00 14,537.00 15,626.00 15,589.00
Depreciation & Amortization 5,404.00 2,877.00 2,668.00 3,128.00 3,261.00
Operating Income 13,760.00 11,119.00 11,726.00 7,519.00 12,124.00
Operating Margin (%) 20.00% 22.00% 24.00% 16.00% 25.00%
Nonoperating Income (2,941.00) 195.00 (2,804.00) 660.00 467.00
Nonoperating Expenses (1,397.00) (487.00) — — —
Income Before Taxes 9,422.00 10,827.00 9,694.00 9,278.00 13,028.00
Income Taxes 1,124.00 2,197.00 1,645.00 1,023.00 1,992.00
Net Income After Taxes 8,298.00 8,630.00 8,049.00 8,255.00 11,036.00
Continuing Operations 8,298.00 8,630.00 8,026.00 8,213.00 11,024.00
Discontinuing Operations (9.00) 14.00 78.00 (69.00) 8,313.00
Total Operations 8,257.00 8,635.00 8,104.00 8,144.00 19,337.00
Total Net Income 8,257.00 8,635.00 8,104.00 8,144.00 19,337.00
Net Profit Margin (%) 12.00% 17.00% 17.00% 17.00% 40.00%
Diluted EPS from Continuing Operations 1.02 1.23 1.19 1.18 1.52
Diluted EPS from Total Operations 1.02 1.23 1.20 1.17 2.66
Diluted EPS from Total Net Income 1.02 1.23 1.20 1.17 2.66
Dividends Per Share 0.72 0.80 1.28 1.16 0.96

Dec 2010 Dec 2009 Dec 2008
Cash and Cash Equivalents at the Beginning of the Year 1,978.00 2,122.00 3,406.00
Net Cash Provided in Operating Activities 11,454.00 16,587.00 18,238.00
Net Cash Provided by Investing Activities (492.00) (31,272.00) (12,835.00)
Net Cash Provided by Financing Activities (11,174.00) 14,481.00 (6,560.00)
Net Increase/Decrease in Cash and Cash Equivalents (243.00) (144.00) (1,284.00)
Cash and Cash Equivalents at the End of the Year 1,735.00 1,978.00 2,122.00

Financial Ratios

Discuss why one should use caution when using financial ratios for analyzing a healthcare organizationâ??s current financial position and future viability. Can you give an example for support?

Financial ratios

Financial ratios are important to the understanding of the financial health of a company. You and your colleagues work for a financial services firm. Your are discussing the merits of the various financial ratios. Identify four financial ratios and state what they tell you about a firm and why it’s important to understand what these ratios mean to both a bank and an investor. Be sure to include your reasoning regarding these issues.

Financial Ratios

See attached file.

Computing Ratios

JACK FROST COMPANY
Income Statements
For the Years Ended December 31

The comparative statements of Jack Frost Company are presented here.

2007 2006
Net sales $1,890,540 $1,750.500
Costs of goods sold 1,058,540 996,000
Gross profit 832,000 754,500
Selling and administrative expenses 506,000 479,000
Income from operations 326,000 275,500
Other expenses and losses
Interest expense 25,000 19,000
Income before income taxes 301,000 265,500
Income tax expense 86,000 77,000
Net income $215,000 $179,500

JACK FROST COMPANY
Balance Sheet
December 31

Assets 2007 2006
Current assets
Cash $60,100 $64,200
Short-term investments 74,000 50,000
Accounts receivable 107,800 102,800
Inventory 133,000 115,500
Total current assets 374,900 332,500
Plant assets (net) 615,300 520,300
Total assets $990,200 $852,800

Liabilities and Stockholders’ Equity
Current Liabilities
Accounts payable 160,000 145,400
Income taxes payable 43,500 42,000
Total current liabilities 203,500 187,400
Bonds payable 210,000 200,000
Total liabilities 413,500 387,400
Stockholders’ equity
Common stock ($5 par) 290,000 300,000
Retained earnings 286,700 165,400
Total stockholders’ equity 576,700 465,400
Total liabilities and stockholders’ equity 990,200 852,800

All sales were on account. Net cash provided by operating activities for 2007 was $240,000. Capital expenditures were $120,000, and cash dividends were $80,000.

Compute the following ratios for 2007.
1. Earnings per share.
2. Return on common stockholders’ equity.
3. Return on assets.
4. Current ratio.
5. Receivables turnover.
6. Average collection period.
7. Inventory turnover.
8. Days in inventory.
9. Times interest earned.
10. Asset turnover.
11. Debt to total assets.
12. Current cash debt coverage.
13. Cash debt coverage.
14. Free cash flow.

Please use the following answer sheet to submit your work. You should show your work outside the answer key.
1
2
3
4
5
6
7
8
9
10
11
12
13
14

Financial Ratios

Refer to the financial statements and other data in PROBLEM 14-12B. Assume that you are an account executive for a large brokerage house and that one of your clients has asked for a recommendation about the possible purchase of Newport Industry stock. You are not acquainted with the stock and for this reason wish to do some analytical work before making a recommendation.

PROBLEM 14-12A Common-Size Statements and Financial Rations for Creditors (LO1, LO3,LO4)

NEWPORT INDUSTRY
Comparative Balance Sheet
This Year Last Year
Assets
Current assets:
Cash ……………………………………… $ 60,000 $ 140,000
Marketable securities ……………………… 0 30,000
Accounts receivable net …………………… 470,000 290,000
Inventory ………………………………….. 940,000 590,000
Prepaid expenses …………………………. 35,000 40,000
Total current assets ……………………….. 1,505,000 1,090,000
Plant and equipment, net ………………….. 1,410,000 1,300,000
Total assets ……………………………….. $2,915,000 $2,390,000

Liabilities and Stockholder’s Equity
Liabilities:
Current liabilities …………………………… $ 703,000 $ 371,000
Bonds payable, 125 ………………………. 500,000 500,000
Total liabilities …………………………….. 1,203,000 871,000
Stockholder’s equity:
Preferred stock, $25 par, 8% ……………… 300,000 300,000
Common stock, $10 par …………………… 550,000 550,000
Retained earnings …………………………. 862,000 669,000
Total stockholder’s equity ………………… 1,712,000 1,519,000
Toal liabilities and equity ……………………. $2,915,000 $2,390,000

NEWPORT INDUSTRY
Comparative Income Statement
This Year Last Year
Sales ……………………………………………… $4,960,000 $4,380,000
Less cost of goods sold …………………………… 3,839,000 3,470,000
Gross margin………………………………………. 1,121,000 910,000
Less operating expenses …………………………… 651,000 550,000
Net operating income ………………………………. 470,000 360,000
Less interest expense………… ………… ……….. 60,000 60,000
Net income before taxes … ………………………. 410,000 300,000
Less income taxes (30%) …………………………. 123,000 90,000
Net income …………………………………….. 287,000 210,000

Dividends paid:
Preferred dividends ……………………………….. 24,000 24,000
Common dividends ……………………………….. 70,000 70,000
Total dividends paid ………………………………. 94,000 84,000
Net income retained ………………………………. 193,000 126,000
Retained earnings, beginning of year ……………….. 669,000 543,000
Retained earnings, end of year ……………………. $ 862,000 $ 669,000
During the past year, the company introduced several new product lines and raised the selling prices on a number of old product lines in order to improve its profit margin. The company also hired a new sales manager, who has expanded sales into several new in territories. Sales terms are 2/10, n/30. All sales are on account. The following ratios are typical of firms in this industry:

Current ratio ……………………………….. 2.5 to 1
Acid-test (quick) ratio……………………… 1.3 to 1
Average age of receivables ………………… 17 days
Inventory turnover in days ………………….. 60 days
Debt-to-equity ratio ……………………….. 0.90 to 1
Times interest earned ………………………. 6.000 times
Return on total assets ………………………. 13%
Price-earnings ratio ………………………. 12

NEWPORT INDUSTRY Balance sheet in Common Size Format

Assets This year Last year
Current assets:
Cash 2.06% 5.86%
Marketable securities 0.00% 1.26%
Accounts receivable net 16.12% 12.13%
Inventory 32.25% 24.69%
Prepaid expenses 1.20% 1.67%
Total current assets 51.63% 45.61%
Plant and equipment, net 48.37% 54.39%
Total assets 100.00% 100.00%

Liabilities and Stockholder’s Equity
Liabilities:
Current liabilities 24.12% 15.52%
Bonds payable, 17.15% 20.92%
Total liabilities 41.27% 36.44%
Stockholder’s equity:
Preferred stock, $25 par, 8% 10.29% 12.55%
Common stock, $10 par 18.87% 23.01%
Retained earnings 29.57% 27.99%
Total stockholder’s equity 58.73% 63.56%
Toal liabilities and equity 100.00% 100.00%

NEWPORT INDUSTRY Income statement in Common size
Comparative Income Statement
This year Last year
Sales 100.00% 100.00%
Less cost of goods sold 77.40% 79.22%
Gross margin 22.60% 20.78%
Less operating expenses 13.13% 12.56%
Net operating income 9.48% 8.22%
Less interest expense 1.21% 1.37%
Net income before taxes 8.27% 6.85%
Less income taxes (30%) 2.48% 2.05%
Net income 5.79% 4.79%

Problem 14-13A
Refer to the financial statements and other data in PROBLEM 14-12B. Assume that you are an account executive for a large brokerage house and that one of your clients has asked for a recommendation about the possible purchase of Newport Industry stock. You are not acquainted with the stock and for this reason wish to do some analytical work before making a recommendation.

Required:

1. You decide first to assess the well-being of the common stockholders. For both this year and last year, compute:
a. The earnings per share. There has been no change in preferred or common stock over the last two years.
b. The dividend yield ratio for common stock. The company’s stock is currently selling for $38 per share; last year it sold for $35 per share.
c. The dividend payout ratio for common stock.
d. The price-earnings ratio. How do investors regard Newport Industry as compared to other companies in the industry? Explain.
e. The book value per share of common stock. Does the difference between market value and book value suggest that the stock is overpriced? Explain.
2. You decide next to assess the company’s rate of return. Compute the following for both this year and last year:
a. The return on total assets. (Total assets at the beginning of last year were $2,230,000.)
b. The return on common stockholders’ equity. (Stockholders’ equity at the beginning of last year was $1,418,000.)
c. Is the company’s financial leverage positive or negative? Explain.
3. Would you recommend that your client purchase shares of Newport Industry stock? Explain.

financial ratios

Compute financial ratios for Lester and Shang-wa for the years 2002, 2003, 2004
Current Ratio
Inventory turn in days
Accounts Receivable turns in days
Debt to Assets
Net working Capital
Net Working Capital
Net Profit Margin
Return on Equity

Summarize your findings and note causes for variations in subject periods

Which firm uses a working capital policy that is aggressive or conservative in its approach to asset financing

Financial Ratios

The course is Corporate Finance

The CFO wants a discussion on what the company can do to improve its financial ratios. A colleague of yours has some ideas, but you consider them somewhat radical. THE CFO likes debate and encourages each of you to outline your ideas of what the company can do.

Analysis of ratios are attached.

Financial ratios

How might financial ratios be used to determine the organization’s financial health? What are some examples?

Financial Ratios

Can someone please put these answers listed on an excel worksheet with formulas included. I cannot figure out how to do this.

Granny’s Cat farms, Inc.

A. Long-term debt ratio:
Long-term debts are debt liabilities due in one year or more
i.e. long-term debt $65,000 A
Other long-tern debt $25,000 B
Long-term debt $85,000

The LTDR is the rate of long-term debt to total capitalization however; it does not include short-term debt, therefore
i.e. Long-term debt $65,000 A
Other long-tern debt $25,000 B
Shareholders Equity $80,000 C
Capitalization $165,000

LTDR = Long-term Debt / (Long-term debt + Total Shareholders Equity)
= 85,000 / 165,000
= 0.5151

Excel Formula

Written as follows: =(A+B)/(A+B+C)
Where A – C will be the cell name on your spreadsheet eg. =(A1+B1)/(A1+B1+C1)

This rule will be the same for all the following answers

B. Total Debt Ratio:

TDR = (Total Assets – Total Equity) / Total Assets
= (242,000- 80,000) / 242,000
= 0.6694

C. Times Interest Earned:

TIE = Earnings Before Interest & Tax (EBIT) / Interest Expense
= 20800 / 5000
= 4.16

D. Cash Coverage Ratio:

CCR = (EBIT + Depreciation) / Interest Expense
= (20800 + (12,000+ 5,700) / 5,000
= 38,500 / 5,000
= 7.7

E. Current ratio:

CR = Current Assets / Current Liabilities
= 102,000 / 77,000
= 1.325

F. Quick Ratio:

QR = (Current Assets – Inventory) / Current Liabilities
= (102,000 -12,000) / 77,000
= 1.169

G. Operating Profit Margin:

OPM = Net Income / Sales
= 20,440 / 95,000
= 0.2155
= 21.55%

H. Inventory Turns:

IT = Cost of Goods Sold / Inventory
= 40,000 / 12,000
= 3.333

I. Days In Inventory:

DII = 365 / Inventory Turns (H. above)
= 365 / 3.333
= 109.511

J. Average Collection Period:

ACP = Sales / Accounts Receivable

NB: In this case, Accounts Receivable is taken to be the difference between the ‘Other Current Assets’ from the beginning to the end of year 200X
i.e. 15,000 – 12,000 = $3,000

= 95,000 / 3,000
= 31.667 days

K. Return on Equity:

ROE = Net Income / Total Equity
= 20,440 / 80,000
= 0.2555
= 25.55%

L. Return on Assets:

ROA = Net Income / Total Assets
= 20,440 / 242,000
= 0.0845
= 8.45%

Financial ratios

Below are the items that I need help figuring out. I need to be able to show the work. I also need any references documented. Thanks!!

Following are selected account balances for SmallBiz Industries Inc.:

Description Current Year Last Year
Cash $ 10,000 $ 10,000
Accounts Receivable $ 30,000 $ 30, 000
Inventory $ 80, 000 $ 75,000
Prepaid Insurance $ 6,000 $ 5,000
Long-term Assets $ 200,000 $196,000
Accounts Payable $ 30,000 $ 25,000
Notes Payable due in 10 Months $ 25,000 $ 15,000
Wages Payable $ 5,000 $ 5,000
Long-term Liabilities $ 70,000 $ 95,000
Stockholders’ (Owner’s) Equity $ 196,000 $ 176,000
Sales $ 250,000 $ 240,000
Cost of Sales $ 175,000 $170,000
Net Income $ 20,000 $ 17,000

Required:
A. Calculate the following financial ratios for the Current Year:

1 Return on Equity
2 Return on Assets
3 Net Working Capital
4 Current Ratio
5 Liabilities to Equity Ratio
6 Average Collection Period
7 Receivables Turnover
8 Number of Days Sales in Inventory
9 Inventory Turnover

B. Which ratio(s) indicate an opportunity for improvement in financial performance? Why