Question

Excel SIM: Selected Financial Ratios 1. Compute and interpret financial rates that managers use to assess day 2. Compute and pret financial restos that managers use for asset management purposes 3. Come and werpret financial rates the managers use for det management purposes. D. PI HOME Selected Financial Ratios. El FORMULAS DATA REVIEW 7 X INSERT PAGE LAYOUT VIEW Sign In Paste 10- - A Alignment Number Conditional Formats Cell Cells Editing Formatting. The Styles Font Styles X Recent financial statements for Zimmer, Inc. we as follows Clipboard nt AL 8 с F 2 3 Competence Sheet This Year Income La 5 Aucts & Current 2 5 3 100005 230.000 77 54.80.000 2.RO 1.000 30 925.000 30.000 Cast of good old 700.000 750,000 Selling and drive 191.000 Openes 2035000 Derection and more 1.100.000 eersland 2.535.000 95.500 410 3 1.546 Nu income before 5 135.100 20 A SSD 2140 Add to 1.135.000 5 Sheet 100 13.00 READY 10 ac

Answer 1

1) Gross Margin = Gross Profit / Sales x 100

= 1992000 / 4980000 x 100

= 40%

2) Current Ratio = Current Assets / Current Liabilities

= 2635000 / 1825000

= 1.44

3) Acid Test Ratio = Cash + Marketable Securities + Accounts Receivables + Other current asset / Current Liabilities

= 360000 + 220000 + 775000 + 355000 / 1825000

= 0.93

4)Accounts Receivable Turnover Ratio = Net Sales / Average Account Receivable

Net Sales = 4980000

Average Account Receivable = Opening Account Receivable + Closing Account Receivable / 2

= 700000 + 775000 / 2 = 737500

Accout Receivable Turnover Ratio = 4980000 / 737500 = 6.75 Times

5) Average Collection Period = 365 days / Average Account Receivable Turnover Ratio

= 365 days / 6.75 = 54 Days

6) Inventory Turnover Ratio = Cost of Goods sold / Average Inventory

Cost of goods sold = 2988000

Average Inventory = Opening Inventory + Closing Inventory / 2

= 750000 + 925000 / 2 = 837500

Inventory Turnover Ratio = 2988000 / 837500 = 3.56 Times

7) Average Sales Period = 365 days / Inventory Turnover Ratio

= 365 days / 3.56 = 103 Days

8) Debt-Equity Ratio = Debt / Equity

Debt = 10% Bonds Payable = 575000

Equity = 2285000

Debt-Equity = 575000 / 2285000 = 0.25

9) Times Interest Earned Ratio = EBIT or Net Operating Income / Interest Expense

= 446000 / 60000 = 7.43 times

10) Book Value per share = Shareholder's Equity / No.of shares outstanding

No.of Shares outstanding = Share capital / par value per share

= 1150000 / 20 = 57500

= 2285000 / 57500

Book Value per share = $ 39.74 per share

11) Earning Per Share = Earnings available to equity shareholders / No. of shares outstanding

= 250900 / 57500 = $ 4.36 per share

12) DIvidend Payout Ratio = Dividend per share / EPS x 100

= 1 / 4.36 x 100

= 22.936 %

13) Dividend Yield Ratio = Dividend per share / Market price per share x 100

1 / 42 x 100 = 2.381%

14) Price Earning Ratio = Market Price per share / Earning per share

= 42 / 4.36

= 9.63 times