Question

How would you calculate the below for the biomedical company Cochlear within the year of 2019-2020?...

How would you calculate the below for the biomedical company Cochlear within the year of 2019-2020?

- Liquidity

- Leverage

- Profitability

- Market Value

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Answer #1

The following are the ways to calculate the requested details,

Liquidity

Liquidity is a method to access how quickly assets can be bought or sold without affecting the price.

Liquidity ratio can be calculate dividing assets by liabilities.

There are three formulas to calculate Liquidity ratio. The following are the different formulas,

Current ratio = Current Assets/Current Liabilities

Acid-test ratio = Cash and Cash Equivalents + Short-Term Investments + Accounts Receivable /Current Liabilities

Cash ratio = Cash and Cash Equivalents + Short-Term Investments/Current Liabilities

Leverage

The leverage ratio is the proportion of debts compared to capital or equity

Formula for calculating leverage ratio = total company debt/shareholder's equity.

There are other two leverage ratios are there, they are

Debt to Capital = Total debt / Capital (debt+equity)

Debt to Assets = Total debt / Assets

Profitability

Profitability ratios are also using for ding margins.

Formula for profitability ratio will be Gross Profit = Net Sales – Cost of Goods Sold.

If we want to find Operating Profit, formula will be = Gross Profit – (Operating Costs, Including Selling and Administrative Expenses)

If we want to find Net Profit, formula will be = (Operating Profit + Any Other Income) – (Additional Expenses) – (Taxes)

The following are two popular methods of calculating Profitability

Profit margin and return on assets. Profit margin describes how much profit a business makes for every dollar in sales. Return on assets describes the ratio of a company's net income to total asset base.

Market value

Market capitalization also known as market value. This can be calculated by multiplying a company's outstanding shares by the current market price of the company.

Formula for calculating Market value

The ratio can be calculated by dividing the market value of the company per share by the book value per share of the company

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