| | INCOME STATEMENT FOR YEAR ENDING DECEMBER 31, 2011 (In Millions) | | | | Liquidity | | | Ratios |
| | | | % of | | Current | Current Assests/Current Liabilites | | 3.58 |
| | | Amount | Total Sales | | Quick | (CA - Inventories)/Current Liabilites | | 1.50 |
| | Net sales | $ 1,500.0 | 100.00% |
| | Variable operating costs (82% of sales) | (1,230.0) | 82.00 | | Activity Ratios |
| | Gross profit | 270.0 | 18.00 | | Inventory Turnover | Cost of Goods Sold / Inventories | | 4.56 |
| | Fixed operating costs except depreciation | (90.0) | 6.00 | | Average Collection Period | Receivables/ (sales/365) | | 43.80 |
| | Earnings before interest, taxes, depreciation, and amortization (EBITDA) | 180.0 | 12.00 | | Accounts Receivable Turnover | Sales / Accounts Receivable | | 8.33 |
| | Depreciation | (50.0) | 3.33 | | Total Asset Turnover | Sales/Total Assets | | 1.78 |
| | Net operating income (NOI) = Earnings before interest and taxes (EBIT) | 130.0 | 8.67 |
| | Interest | (40.0) | 2.67 | | Financing Ratios |
| | Earnings before taxes (EBT) | 90.0 | 6.00 | | Debt Ratio | Total Liabilities / Total Assests | | 0.51 |
| | Taxes (40%) | (36.0) | 2.40 | | Debt Equity Ratio | Total Liabilities / Common Stockholders Equity | | 1.04 |
| | Net income | $ 54.0 | 3.60 | | Times Interest Earned | EBIT/Interest Expense | | 3.25 |
| | Preferred dividends | - 0 | | | Profitability |
| | Earnings available to common stockholders (EAC) | 54.0 | | | Net Profit Margin | Net Income/Sales | | 3.60% |
| | Common dividends | (29.0) | | | Return on Assests | Net Income/Total Assets | | 6.39% |
| | Addition to retained earnings | 25.0 | | | Gross Profit Margin | (Sales - COGS)/Sales | | 18.00% |
| | | | | | Operating Profit Margin | Opearating Profits (EBIT)/Sales | | 8.67% |
| | Per share data (25,000,000 shares): | | | | Return on Equity | Net Income/Common Equity | | 13.01% |
| | Numbers of Shares Outstanding | 25.0 |
| | Earnings per share: (Net income)/Shares Dividends per share | $ 2.16 | | | Market Value |
| | | | | | Earnigs Per Share | Net Income / Common Shares Outstanding | | 2.16 |
| | (Common dividends)/Shares | $ 1.16 | | | Price Earnings Ratio | Market Price of Shares/Earning Per Share | | 10.65 |
| | | | | | Market/Book | Market Price/Book Value (Per Share) | | 1.39 |
| | BALANCE SHEET AS OF DECEMBER 31, 2011 (In Millions) |
| | | Amount |
| | Assets |
| | Cash and equivalents | $ 15.0 |
| | Accounts receivables | 180.0 |
| | Inentory | 270.0 |
| | Total current assets | 465.0 |
| | Net plant and equipments | 380.0 |
| | TOTAL ASSEST | $ 845.0 |
| | Liabilities and Equity |
| | Accounts Payable | $ 30.0 |
| | Accruals | 60.0 |
| | Notes payable | 40.0 |
| | Total current liabilities | 130.0 |
| | Long-Term Debt | 300.0 |
| | TOTAL LIABILITIES (DEBT) | $ 430.0 |
| | Common stock (25 million shares) | $ 130.0 |
| | Retained Earnings | 285.0 |
| | TOTAL COMMON EQUITY | 415.0 |
| | Total Liability & Common Equity | $ 845.0 |
| | Book value per share = (Common equity)/Shares | $ 16.60 |
| | Market value per share (stock price) | $ 23.00 |
| | Additional information: |
| | Net working capital = Current assets - Current liabilities | $ 335.0 |
| | Net worth = Total assets - Total liabilities | $ 415.0 |
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Unit2SeminarRatioAnalysisSolution.xlsx
