Financial ratios

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Here are simplified financial statements of Phone Corporation from a recent year:

INCOME STATEMENT (Figures in millions of dollars)
Net sales	12,300
Cost of goods sold	3,610
Other expenses	4,022
Depreciation	2,248

Earnings before interest and taxes (EBIT)	2,420
Interest expense	640

Income before tax	1,780
Taxes (at 35%)	623

Net income	1,157
Dividends	756

BALANCE SHEET (Figures in millions of dollars)
	End of Year	Start of Year
Assets
Cash and marketable securities	80	149
Receivables	1,932	2,310
Inventories	142	193
Other current assets	822	887

Total current assets	2,976	3,539
Net property, plant, and equipment	19,883	19,825
Other long-term assets	4,126	3,680

Total assets	26,985	27,044

Liabilities and shareholders’ equity
Payables	2,474	2,950
Short-term debt	1,374	1,528
Other current liabilities	766	742

Total current liabilities	4,614	5,220
Long-term debt and leases	9,259	8,444
Other long-term liabilities	6,088	6,059
Shareholders’ equity	7,024	7,321

Total liabilities and shareholders’ equity	26,985	27,044

Calculate the following financial ratios: (Use 365 days in a year. Do not round intermediate calculations.Round your answers to 2 decimal places.)


a.	Long-term debt ratio	[removed]
b.	Total debt ratio	[removed]
c.	Times interest earned	[removed]
d.	Cash coverage ratio	[removed]
e.	Current ratio	[removed]
f.	Quick ratio	[removed]
g.	Operating profit margin	[removed]	%
h.	Inventory turnover	[removed]
i.	Days in inventory	[removed]	days
j.	Average collection period	[removed]	days
k.	Return on equity	[removed]	%*
l.	Return on assets	[removed]	%
m.	Return on capital	[removed]	%**
n.	Payout ratio	[removed]

11 years ago
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