Question

mDKK As of and for the years ended 12/31: 2017 2016 Average 834 6,754 : Cash and cash equivalents 906 6,333 7,174 2,383 2,991 17,65817,101 9,911 29,937 762 Accounts receivable : Inventory 2,687: Total current assets Total assets 17,380 29,924 Accounts payable Short-term debt Total current liabilities Long term debt Total liabilities Total equity (all common) 2,811 2,837 41 8,516 8,595 778 9,1979,898 20,714 20,039 2,824 326 8,556 473 9,548 20,377 611 167 Sales Cost of goods sold Operating income Net income 34,995 37,934 10,239 10,531 10,35912,448 7,8069,436 36,465 10,385 11,404 8,621 Operating cash flows Investing cash flows Financing cash flows 10,691 9,084 (1,523) (2,992) (9,378) (6,575) 9,888 (2,258) (7,977) 2,201 8,252 1,343 34 Capital expenditures Purchase of inventory 1,4942,908 7,6838,821 Depreciation and amortization1,3901,295 36 820 Interest expense and payment 32 83

Need the following ratios solved using the given financial data. please show work. if needed use an effective tax rate of 20%

Invested capital

CAPEX ratio

Fixed charge coverage ratio

Financial leverage 1 (equity multiplier)

Cash received from customers

Answer 1

Ratios according to current year ending 31st Dec 2017

A) Invested Capital = long term debt + total equity

=167+20,714 = 20,881 (long term debt can bonds,debentures etc....)

B) CAPEX ratio (CAPEX to operationg cash ratio) = cash flow from operations / CAPEX

CAPEX =capital exp = 1,494 (given)

cash flow from operations/ operating cash flows = 10,691 (given)

so, CAPEX to operationg cash ratio = 1,494/10,691 = 0.14 (rounded figure)

C) Fixed charge coverage ratio =

(Earnings before interest and taxes + Fixed charges before tax) / (Fixed charges before tax + interest)

Earnings before interest and taxes (EBIT) given as "net income" = 7,806

Fixed charges before tax( depreciation and ammortisation & lease payment are taken as fixed exps as they remain fixed irrespective of the production) = 1,390 + 858 =2,248

Interest exp= 32 (given)

Fixed charge coverage ratio = (7,806 + 2,248) / (2,248 + 32) = 10,054 / 2,280 = 4.40

D) Financial leverage 1 (equity multiplier) = Total assets / Total stockholders equity

If equity multipler is 1 that means all the assets are contributed by the shareholders.Also less leverage can be interpreted as company failure  to obtain debt from market which is not that interesting for investors

Total assets =29,911(given)

Total stockholders equity = 20,714(given)

  equity multiplier = 29,911 / 20,714 = 1.44

( It is clear frpm the ratio that companies majority of assets are because of owners funding,not debt,giving us an idea that company failed to raise much debt from market )