Page103.docx
TABLE 3-2 MicroDrive Inc.: Summary of Financial Ratios (Millions of Dollars)
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RATIO
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FORMULA
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CALCULATION
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RATIO
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INDUSTRY AVERAGE
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COMMENT
|
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Liquidity
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Current assets Current liabilities
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$1,000 $310 =
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3.2
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4.2
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Poor
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Quick
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Current assets − Inventories Current liabilities
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$385 $310 =
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1.2
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2.1
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Poor
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Asset Management
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|
|
|
|
|
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Inventory turnover
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Sales Inventories
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$3,000 $615 =
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4.9
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9.0
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Poor
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Days sales outstanding (DSO)
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Receivables Annual sales / 365
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$375 $8.219 =
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45.6
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36.0
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Poor
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Fixed assets turnover
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Sales Net fixed assets
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$3,000 $1,000 =
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3.0
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3.0
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OK
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Total assets turnover
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Sales Total assets
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$3,000 $2,000 =
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1.5
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1.8
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Poor
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Debt Management
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|
|
|
|
|
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Debt ratio
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Total liabilities Total assets
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$1,064 $2,000 =
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53.2%
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40.0%
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High (risky)
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Times-interest-earned (TIE)
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Earnings before interest and taxes ( EBIT ) Interest charges
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$283.8 $88 =
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3.2
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6.0
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Low (risky)
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EBITDA coverage
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EBITDA + Lease pmts . Interest + Principal payments + Lease pmts .
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$411.8 $136 =
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3.0
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4.3
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Low (risky)
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Profitability
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|
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|
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Profit margin on sales
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Net income available to common stockholders Sales
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$113.5 $3,000 =
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3.8%
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5.0%
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Poor
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Basic earning power (BEP)
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Earnings before interest and taxes ( EBIT ) Total assets
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$283.8 $2,000 =
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14.2%
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17.2%
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Poor
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Return on total assets (ROA)
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Net income available to common stockholders Total assets
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$113.5 $2,000 =
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5.7%
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9.0%
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Poor
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Return on common equity (ROE)
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Net income available to common stockholders Common equity
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$113.5 $896 =
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12.7%
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15.0%
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Poor
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Market Value
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|
|
|
|
|
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Price/earnings (P/E)
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Price per share Earnings per share
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$23.00 $2.27 =
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10.1
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12.5
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Low
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Price/cash flow
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Price per share Cash flow per share
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$23.00 $4.27 =
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5.4
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6.8
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Low
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Market/book (M/B)
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Market price per share Book value per share
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$23.00 $17.92 =
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1.3
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1.7
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Low
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