| Use this Excel spreadsheet to compute ratios; show your computations for all ratios on this tab and also include your commentary. |
| The financial statements used to calculate these ratios are available in Appendix A and Appendix B of your textbook. |
| | | Tootsie Roll | | | Hershey's | | | Interpretation and comparison between the two companies' ratios (reading the Appendix of Chapter 13 will help you prepare the commentary). |
| | | | | | | | | The comparison of the ratios is an important part of the project. A good approach is to briefly explain what the ratio tells us. Indicate whether a higher or lower ratio is better. Then compare the two companies on this basis. Remember—each ratio below requires a comparison. |
| Earnings per Share of Common Stock (basic - common) | As given in the income statement | | | $ 0.89 | | | $ 3.01 |
| Current Ratio | Current assets | $197,241 | = | 3.25 | $2,113,485 | = | 1.44 |
| | Current liabilities | $60,765 | | | $1,471,110 |
| Gross Profit Margin | Gross profit | $183,321 | = | 33.3% | $2,859,882 | = | 43.0% |
| | Net Sales | $549,870 | | | $6,644,252 |
| Rate of Return (Net Profit Margin) on Sales | Net Income | $52,004 | = | 9.5% | $660,931 | = | 9.9% |
| | Net Sales | $549,870 | | | $6,644,252 |
| Inventory Turnover | Cost of Goods Sold | $365,573 | | 5.5 | $3,784,370 | | 5.9 |
| | Average Inventory | $67,072 | | times | $641,108 | | times |
| Days' inventory outstanding (DIO) | 365 days | 365 | = | 67 | 365 | = | 62 |
| | Inventory turnover | 5.5 | | days | 5.9 | | days |
| Accounts Receivable Turnover | Net credit sales | $549,870 | = | 13.1 | $6,644,252 | = | 15.4 |
| | Average Net Accounts Receivable | $42,002 | | | $430,441 |
| Days' sales outstanding (DSO) | 365 | 365 | = | 27.9 | 365 | = | 23.6 |
| | Receivable Turnover Ratio | 13.1 | | days | 15.4 | | days |
| Asset turnover | Net Sales | $549,870 | = | 0.65 | $6,644,252 | = | 1.45 |
| | Average Total Assets | $852,297 | | | $4,580,967 |
| Rate of Return on Total Assets (ROA) | Rate of return on sales times Asset Turnover | $52,004 | = | 6.1% | $660,931 | = | 14.4% |
| | | $852,297 | | | $4,580,967 |
| Debt Ratio | Total Liabilities | $196,922 | = | 23.3% | $3,706,466 | = | 84.0% |
| | Total Assets | $846,737 | | | $4,412,199 |
| Times-Interest-Earned Ratio | Net Income + Int Expense + Tax Expense | $74,301 | = | 542.3 | 1,111,148 | = | 11.6 |
| | Interest Expense | $137 | | | 95,569 |
| Dividend Yield | Dividend per share of common stock (Yahoo Finance 11/1/2013) | $0.32 | = | 1.0% | $1.94 | = | 2.0% |
| | Market price per share of common stock (Yahoo Finance 11/1/2013) | $31.72 | | | $98.85 |
| Rate of Return on Common Stockholders' Equity (ROE) | Net income - Preferred dividends | $52,431 | = | 8.0% | $660,931 | = | 68.5% |
| | Average common stockholders' equity | $657,875 | | | $964,658 |
| Free cash flow | Net cash provided by operating activities minus cash payments earmarked for investments in plant assets | $93,033 | = | $93,033 | $836,100 | | $ 836,100 |
| | | | | | | = |
| Price/Earnings Ratio (Multiple) | 12/31/12 | $25.92 | = | 29 | $72.22 | = | 24 |
| (please see the instructions for the dates to use for this ratio) | EPS as of 12/31/2012 | $0.89 | | | $3.01 |
slejax
course_project_comparative_kohls_and_jc_penny_slejax.xlsx
