Homework Answers
Financial Ratio Analysis
Use the reported financial ratios to answer the following questions.
Answer:
Question 1:Which firm is more liquid? Explain.
Answer 1: Amazon
Explanation: Current ratio of Amazon is 1.04 which is greater than 1.00 & Wal-Mart, it means it is fully covered. High liquidity means a company has the ability to meet its short-term obligations.
Question 2:Which firm is more heavily indebted? Explain.
Answer 2:Amazon
Explanation: Debt/Equity ratio of Amazon is 1.37 which is greater than 1.00(100%) & Wal-Mart, tells you that a company has more debt than assets
Question 3:Which firm is better at cost management? Explain.
Answer 3:Wal-Mart
Explanation: Asset Turnover ratio of Wal-Mart is 2.48 which is greater than Amazon.it measures the efficiency of a company's assets to generate revenue or sales.
Question 4:Which firm sells off its inventory fester? Explain.
Answer 4:Amazon
Explanation: Inventory Turnover ratio of Amazon is 9.97 which is greater than Wal-Mart,it shows how effectively inventory is managed firm sells off its inventory fester.
Question 5:Which firm generates more sales revenue per dollar spent on fixed assets? Explain.
Answer 5:Amazon
Explanation: Fixed Asset Turnover ratio of Amazon is 4.56 which is greater than Wal-Mart.The higher the asset turnover ratio, the more efficient a company & generates more sales revenue per dollar spent on fixed assets.
Question 6:If an investor prefers dividend income over capital gains (Income over growth), which firm's stock is the better investment? Explain.
Answer 6:Wal-Mart
Explanation: Dividend per Share ratio of Wal-Mart is 2.04 which is greater than Amazon. Investor prefers Income over growth will prefer Wal-Mart as better investment.
Question 7:Which firm collects its receivables faster? Explain.
Answer 7:Wal-Mart
Explanation: Receivables Turnover ratio of Wal-Mart is 87.4 which is greater than Amazon.A high receivables turnover ratio can indicate that a company's collection of accounts receivable is efficient and that the company has a high proportion of quality customers that pay their debts quickly.
Question 8:Which firm generates more profit per share of stock? Explain.
Answer 8:Amazon
Explanation: Earnings Per Share ratio of Amazon is 6.15 which is greater than Wal-Mart.This indicates that firm generates more profit per share of stock.
Question 9:Which firm is more efficient at converting cash outflows into cash inflows? Explain.
Answer 9:Wal-Mart
Explanation: Cash Conversion Cycle ratio of Wal-Mart is 3.84 which is greater than Amazon.This indicates more efficient at converting cash outflows into cash inflows.
Question 10:What Is the business cycle or business year for both of these firms?
Answer 10:Business cycle for Amazon is 36.59 Days & for Wal-Mart is 42.44 Days.
Explanation: Days in Inventory ratio indicates days a firm averagely needs to turn its inventory into sales.
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Finance 313 - Handout #36B Financial Ratios for Amazon (AMZN) & Wal-Mart (WMT) AMZN 2017-12...
Financial Indicators/Ratios 2018 2017 Current ratio ? 2.92 : 1 Acid test ratio ? 1.28 :...
Financial Indicators/Ratios 2018 2017 Current ratio ? 2.92 : 1 Acid test ratio ? 1.28 : 1 Debtors collection period ? 16 days Creditors payment period ? 27 days Inventory turnover rate ? 24 times/year Gross profit percentage ? 35% Net profit percentage ? 10,29% Return on equity ? 210,53% Debt equity ratio ? 0.74 Catwalksale (Pty) Ltd Extract from the statement of profit or loss and other comprehensive income for the year ending 31 December 2018: 2018 2017 Revenue...
Wal-Mart Stores Inc. (WMT) Income Statement View: Annual Data All numbers in thousands Jan 31, 2012...
Wal-Mart Stores Inc. (WMT) Income Statement View: Annual Data All numbers in thousands Jan 31, 2012 Jan 31, 2011 Jan 31, 2013 Period Ending Total Revenue Cost of Revenue 469.162.000 352488,000 446.950.000 335,127.000 4 21.849.000 314,946,000 116,674,000 111,823,000 106,903,000 Gross Profit Operating Expenses Research Development Selling General and Administrative No. Recucina Others 88,873,000 85,265,000 81.361.000 Total Operating Expenses Operating Income or Loss 27,801,000 26,558,000 25,542,000 Income from Continuing Operations 187,000 Total Other Income/Expenses Net Earings Before Interest And Taxes Interest...
Wal-Mart Stores Inc. (WMT) Income Statement View. Annual Data All numbers in thousands Period Ending Jan 31, 2...
Wal-Mart Stores Inc. (WMT) Income Statement View. Annual Data All numbers in thousands Period Ending Jan 31, 2013 Jan 31, 2012 Jan 31, 2011 Total Revenue 469,162,000 446,950,000 335,127.000 Cost of Revenge 352.488,000 421,849,000 314.948.000 106.903.000 116,674,000 111,823,000 Gross Profit Operating Expenses Research Develoment Seling General and Administrative No. Recurrina Others 88,873,000 85,265,000 81,361,000 Total Operating Expenses Operating income or Loss 27.801.000 26.558.000 25.542.000 Income from Continuing Operations Total Other Income/Expenses Net Earnings Before Interest And Taxes Interest Expense Income...
Selected Financial Ratios For the fiscal years-ending Church and Dwight Procter & Gamble Company Profitability Ratios...
Selected Financial Ratios For the fiscal years-ending Church and Dwight Procter & Gamble Company Profitability Ratios 12/31/18 12/31/17 12/31/16 6/30/19 6/30/18 6/30/17 ROA % (Net) 9.41 14.34 10.63 3.34 8.17 12.38 ROE % (Net) 24.34 35.43 22.88 7.83 18.14 27.24 EBITDA Margin % 20.6 21.6 22.45 13.57 24.57 25.16 Liquidity Ratios 12/31/18 12/31/17 12/31/16 6/30/19 6/30/18 6/30/17 Quick Ratio 0.49 0.66 0.47 0.51 0.59 0.65 Current Ratio 0.81 1.07 0.76 0.75 0.83 0.88 Debt Management 12/31/18 12/31/17 12/31/16 6/30/19 6/30/18...
Calculate the following ratios based on Wendy's 2017 and 2018 financial statements and comment on the...
Calculate the following ratios based on Wendy's 2017 and 2018
financial statements and comment on the differences between FY 2017
and FY 2018.
Wendy's
FY 2017
FY 2018
Liquidity
Current Ratio:
Quick Ratio:
Comments on the companies' liquidity - what do the numbers
say?
Asset Management
Total Asset Turnover:
Avg Collection Period:
Comments on the companies' asset management - what do the numbers
say?
Debt Management
Total Debt to Total Assets:
Times Interest Earned:
Comments on the companies' debt management...
ASSURANCE OF LEARNING EXERCISES 1. conn LO4-1 Using the financial ratios provided in the Appendix and...
ASSURANCE OF LEARNING EXERCISES 1. conn LO4-1 Using the financial ratios provided in the Appendix and the following financial statement information for Macy's, Inc., calculate the following ratios for Macy's for both 2015 and 2016. 1. Gross profit margin 2. Operating profit margin 3. Net profit margin 4. Times interest earned coverage 5. Return on shareholders' equity 6. Return on assets 7. Long-term debt-to-equity ratio 8. Days of inventory 9. Inventory turnover ratio 10. Average collection period Based on these...
1. Pick two publicly traded companies in the same industry. 2. Calculate the ratios from your...
1. Pick two publicly
traded companies in the same industry.
2. Calculate the
ratios from your textbook or any other ratios you deem necessary
for each company for two years. Some examples are working capital,
current ratio, current cash debt coverage ratio, inventory turnover
ratio, days in inventory, receivables turnover ratio, average
collection period, debt to asset ratio, cash debt coverage ratio,
times interest earned ratio, free cash flow, earnings per share,
price earnings ratio, gross profit rate, profit margin...
1.What four ratios would you use to evaluate a service business and why? 2.Reviewing Stryker Corporation's...
1.What four ratios would you use to evaluate a service
business and why?
2.Reviewing Stryker Corporation's four years of ratios on page
65 of your text, what trends do you see and what are your
suggestions for improvement?
3.How does Accounts Receivable Turnover relate to Number of
Days Sales in Receivables?
4.What does context mean in ratio analysis and how did we use
it to analyze the Stryker Corporation?
Chapter 2 Eluting Financial Performance 65 TABLE 22 Ratio Analysis of...
1. True or False? The larger the firm's TIE ratio, the less times a firm can...
1. True or False? The larger the firm's TIE ratio, the less times a firm can pay its interest expenses. 2. True or False? Your firm has a debt to equity ratio of 55%, and its biggest competitor has a debt to equity ratio of 66%. Based on this information, your firm is less levered. 3. True or False? A dividend payout ratio larger than 50% indicates a firm retains more than it pays out to shareholders. 4. True or...
Please show all work. 1. Statement of Cash Flows and Standardized Financial Statements a) Net income...
Please show all work. 1. Statement of Cash Flows and Standardized Financial Statements a) Net income for your firm was $10,000 last year. The depreciation expense was $2,500; accounts receivable increased $1,250; accounts payable increased $800; and inventories increased by $2,000. Identify the sources and uses of cash • What was the total cash flow from operations for the period? Operating activities = Net Income + Depreciation + Source (inflow) - Use foutflow) b) i) Prepare the 2018 common-size Income...
Wal-Mart Stores Inc. (WMT) Income Statement View: Annual Data All numbers in thousands Jan 31, 2012 Jan 31, 2011 Jan 31, 2013 Period Ending Total Revenue Cost of Revenue 469.162.000 352488,000 446.950.000 335,127.000 4 21.849.000 314,946,000 116,674,000 111,823,000 106,903,000 Gross Profit Operating Expenses Research Development Selling General and Administrative No. Recucina Others 88,873,000 85,265,000 81.361.000 Total Operating Expenses Operating Income or Loss 27,801,000 26,558,000 25,542,000 Income from Continuing Operations 187,000 Total Other Income/Expenses Net Earings Before Interest And Taxes Interest...
Wal-Mart Stores Inc. (WMT) Income Statement View. Annual Data All numbers in thousands Period Ending Jan 31, 2013 Jan 31, 2012 Jan 31, 2011 Total Revenue 469,162,000 446,950,000 335,127.000 Cost of Revenge 352.488,000 421,849,000 314.948.000 106.903.000 116,674,000 111,823,000 Gross Profit Operating Expenses Research Develoment Seling General and Administrative No. Recurrina Others 88,873,000 85,265,000 81,361,000 Total Operating Expenses Operating income or Loss 27.801.000 26.558.000 25.542.000 Income from Continuing Operations Total Other Income/Expenses Net Earnings Before Interest And Taxes Interest Expense Income...
Calculate the following ratios based on Wendy's 2017 and 2018
financial statements and comment on the differences between FY 2017
and FY 2018.
Wendy's
FY 2017
FY 2018
Liquidity
Current Ratio:
Quick Ratio:
Comments on the companies' liquidity - what do the numbers
say?
Asset Management
Total Asset Turnover:
Avg Collection Period:
Comments on the companies' asset management - what do the numbers
say?
Debt Management
Total Debt to Total Assets:
Times Interest Earned:
Comments on the companies' debt management...
ASSURANCE OF LEARNING EXERCISES 1. conn LO4-1 Using the financial ratios provided in the Appendix and the following financial statement information for Macy's, Inc., calculate the following ratios for Macy's for both 2015 and 2016. 1. Gross profit margin 2. Operating profit margin 3. Net profit margin 4. Times interest earned coverage 5. Return on shareholders' equity 6. Return on assets 7. Long-term debt-to-equity ratio 8. Days of inventory 9. Inventory turnover ratio 10. Average collection period Based on these...
1. Pick two publicly
traded companies in the same industry.
2. Calculate the
ratios from your textbook or any other ratios you deem necessary
for each company for two years. Some examples are working capital,
current ratio, current cash debt coverage ratio, inventory turnover
ratio, days in inventory, receivables turnover ratio, average
collection period, debt to asset ratio, cash debt coverage ratio,
times interest earned ratio, free cash flow, earnings per share,
price earnings ratio, gross profit rate, profit margin...
1.What four ratios would you use to evaluate a service
business and why?
2.Reviewing Stryker Corporation's four years of ratios on page
65 of your text, what trends do you see and what are your
suggestions for improvement?
3.How does Accounts Receivable Turnover relate to Number of
Days Sales in Receivables?
4.What does context mean in ratio analysis and how did we use
it to analyze the Stryker Corporation?
Chapter 2 Eluting Financial Performance 65 TABLE 22 Ratio Analysis of...
Please show all work. 1. Statement of Cash Flows and Standardized Financial Statements a) Net income for your firm was $10,000 last year. The depreciation expense was $2,500; accounts receivable increased $1,250; accounts payable increased $800; and inventories increased by $2,000. Identify the sources and uses of cash • What was the total cash flow from operations for the period? Operating activities = Net Income + Depreciation + Source (inflow) - Use foutflow) b) i) Prepare the 2018 common-size Income...
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