alculate ratios related to how quickly the company pays its trade debt and how quickly it collects from its customers. These are known as Accounts Payable (AP) Turnover and Accounts Receivable (AR) Turnover. The formula for AP Turnover is: Cost of Goods Sold/average accounts payable. The formula for AR Turnover is: credit sales/average accounts receivable. Calculate the AP and AR Turnover for each of 2011-2014. Interpret your calculations: what does this information mean? How is the company doing?
alculate ratios related to how quickly the company pays its trade debt and how quickly it collects from its customers. These are known as Accounts Payable (AP) Turnover and Accounts Receivable (AR) Turnover. The formula for AP Turnover is: Cost of Goods Sold/average accounts payable. The formula for AR Turnover is: credit sales/average accounts receivable. Calculate the AP and AR Turnover for each of 2011-2014. Interpret your calculations: what does this information mean? How is the company doing?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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- Calculate ratios related to how quickly the company pays its trade debt and how quickly it collects from its customers. These are known as Accounts Payable (AP) Turnover and
Accounts Receivable (AR) Turnover. The formula for AP Turnover is: Cost of Goods Sold/average accounts payable. The formula for AR Turnover is: credit sales/average accounts receivable. Calculate the AP and AR Turnover for each of 2011-2014. Interpret your calculations: what does this information mean? How is the company doing?
Transcribed Image Text:ANNETILIA ML. ναιιανιαιινιωιωι WINES
Comparative Income Statement ($M)
For the Years Ended Dec 31, 2009 to 2014
Sales
Cost of Goods Sold
Gross Profit
Selling and Administration
Depreciation
Operating Profit
Interest
Earnings Before Taxes
Taxes
Net Income
2011
2012
2013
2014
$725.45 $793.34 $814.55
$856.00
2009 2010
$287.14 $299.45
$209.69 $210.45 $506.91 $559.53 $595.34 $629.43
$ 77.45 $ 89.00 $218.54 $233.81 $219.21 $226.57
$ 57.34 $60.06 $104.14 $125.53 $136.57 $160.23
$7.53 $13.54 $21.54 $ 20.89 $21.22 $26.54
$ 12.58 $15.40 $ 92.86 $ 87.39 $61.42 $ 39.80
$9.41 $ 12.53 $35.51 $24.67 $17.96 $13.01
$ 3.17 $2.87 $57.35 $ 62.72 $ 43.46 $26.79
1.01 $0.92 $18.35 $20.07 $13.91 $ 8.57
$ 2.16 $ 1.95 $39.00 $42.65 $29.55 $18.22
$
tax rate
32%
1 - tax rate
68%
Net Income +1(1-tax rate) $ 8.57
Cash
A/R
Inventory
Appendix A2: Canadian Motorbikes
Comparative Balance Sheet ($M)
For the Years Ended Dec 31, 2009 to 2014
2009
Total Current Assets
Land, Plant and Equipment
Other Assets
Total Assets
32%
68%
$10.46 $ 63.15
A/P
Current Portion of LT Debt
Total Current Liabilities
Long-term Debt
Total Liabilities
Shareholders' Equity
Total Liabilities and Equities
32%
68%
32%
32%
32%
68%
68%
68%
$59.43 $ 41.76 $ 27.07
2011
2014
2010
2012 2013
$ 10.76 $ 20.56 $ 25.78 $ 38.55 $ 34.21 $ 29.75
$ 45.01 $ 48.54 $ 84.89 $ 85.39 $ 95.32 $ 99.23
$ 17.12 $79.66 $ 82.69 $ 79.30 $ 53.88 $ 75.33
$72.89 $148.76 $193.36 $203.24 $183.41 $204.31
$ 54.32 $ 162.28 $184.18 $ 178.01 $ 182.74 $211.48
$ 2.47 $ 5.39 $ 8.38 $ 8.82 $9.49 $ 11.65
$129.68 $316.43 $385.92 $390.07 $375.64 $427.44
$ 53.77 $ 90.73 $112.15 $109.96 $129.04 $189.84
$ 2.88 $ 18.09 $ 18.77 $ 14.32 $ 8.56 $ 6.22
$ 52.82 $185.45 $193.84 $161.98
$109.47 $294.27 $324.76 $286.26
$ 20.21 $ 22.16 $ 61.16 $ 103.81
$129.68 $316.43 $385.92 $390.07
$ 56.65 $108.82 $130.92 $124.28 $137.60 $ 196.06
$104.68 $ 79.80
$242.28 $275.86
$ 133.36 $ 151.58
$375.64 $427.44
Transcribed Image Text:Appendix A3: Canadian Motorbikes
Industry Averages
Current Ratio
Cash Ratio
Inventory Turnover (days)
A/R Turnover (days)
A/P Turnover (days)
Cash Conversion Cycle
Fixed Assets Turnover
Total Assets Turnover
Debt Ratio
Times Interest Earned
Gross Profit Margin
Operating Profit Margin
Net Profit Margin
Retum on Assets
Retum on Equity
1.25
0.27
44.12
32.45
60.23
16.35
3.72
2.05
0.54
9.33
32.00%
14.00%
8.50%
17.46%
38.25%
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