a. Calculate the return on assets. (Ente b. Calculate the operating profit margin c. Calculate the sales-to-assets ratio. (R d. Calculate the inventory turnover. (Rom
a. Calculate the return on assets. (Ente b. Calculate the operating profit margin c. Calculate the sales-to-assets ratio. (R d. Calculate the inventory turnover. (Rom
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:Balance Sheet (figures in $ millions)
End of
Start of
Year
Year
Assets
Current assets:
Cash and marketable securities
Accounts receivable
$ 6,907
$6,796
5,654
43,823
5,875
43,086
1,981
Inventories
Other current assets
Total current assets
Fixed assets:
3,551
$ 59,824
$57,849
Net fixed assets
$114,858
$114,218
26,998
Other long-term assets
30,080
$204,762
Total assets
$199,065
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable
$ 46,132
32,469
$ 78,601
36,865
$ 41,473
25,535
$ 67,008
Other current liabilities
Total current liabilities
Long-term debt
Other long-term liabilities
Total liabilities
Total shareholders' equity
Total liabilities and shareholders' equ Ity
42,058
11,347
12,121
$126,813
$121,187
77,878
77,949
$204,762
$199,065
Income Statement (figures in $ millions)
Net sales
$500,383
373,436
96,021
$485,913
Cost of goods sold
Selling, general, and administrative expenses
361,296
91,813
Depreciation
Earnings before interest and taxes (EBIT)
10,569
$ 20,357
2,218
$ 18,139
10,120
$ 22,684
Interest expense
Taxable income
2,307
$ 20,377
Tax
4,600
7,132
Net income
$ 13,539
$ 13,245
Dividends
6,164
6,735
Addition to retained earnings
7,375
6,510
Assume a tax rate of 35%. Calculate the following using balance-sheet figures from the start of the year and Income stat
from the end of the year:
a. Calculate the return on assets. (Enter your answer as a percent rounded to 2 decimal places.)
b. Calculate the operating profit margin. (Enter your answer as a percent rounded to 2 decimal places.)
c. Calculate the sales-to-assets ratio. (Round your answer to 2 decimal places.)
d. Calculate the inventory turnover. (Round your answer to 2 decimal places.)
e. Calculate the debt-equity ratio. (Round your answer to 4 decimal places.)
f. Calculate the current ratio. (Round your answer to 3 decimal places.)
Calculate the quick ratio. (Round your answer to 4 decimal places.)
O Answer is not complete.
a.
Return on assets
6.61 X %
Operating profit
margin
b.
%
2.44O
8.52 X
C.
Sales-to-assets ratio
d.
Inventory turnover
Debt-equity ratio
Current ratio
1.6268 X
0.7618
e
f
Quick ratio
0.2035 X
Expert Solution
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Ratio analysis is a quantitative measure of the company's financial performance. It is a method by which an analysis of the company profitability, liquidity, and activities are made. This analysis is done with the help of the balance sheet and the income statement of the company. In simple words, it shows how a company is working in recent times. The ratio analysis is generally based on the historical data of the previous years. The are many parties who are interested in the ratio analysis of the company.
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