at is the overall assement of the company's credit risk (explain)? Is there any difference between the two years?
at is the overall assement of the company's credit risk (explain)? Is there any difference between the two years?
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter4: The Balance Sheet And The Statement Of Shareholders' Equity
Section: Chapter Questions
Problem 16P: Ratios Analyses: McCormick Refer to the information for McCormick above. Additional information for...
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Question
What is the overall assement of the company's credit risk (explain)? Is there any difference between the two years?
Transcribed Image Text:Ratios
Formula
2018
2017
Current ratio
Current ratio = Current Asset / Current Liabilities
12494.2/5684.2
5283.4/4220.7
2,198057774
1.25178288
2.20
1.25
Quick ratio =( Cash + Short term investments + Accounts receivable )/
Quick ratio
Current Liabilities
(8756.3+ 181.5+693.1)/ 5684.2
(2462.3+ 228.6+870.4)/4220.7
1.694328138
0.843769991.
1.69
0.84
Liabilities to Equity ratio Liabilities to Equity ratio = Total Liabilities / Equity
22980.6/ 1175.8
8908.6/5457.0
19.54465045
1.632508704
19.54
1.63
Total debt to equity ratio Total debt to equity ratio= (Short term debt + Long term debt)/Equity (349.9+ 9090.2)/1175.8
(0+ 3932.6)/5457
8.028661337
0.720652373
8.03
0.72
Times interest earned
Times interest earned = EBIT/ Interest expenses
3883.3/ 170.3
4134.7/92.5
22.80270112
44.69945946
22.80
44.70
Cash from operations to Cash from operations to total debt = Cash from operations / (Short term
total debt
debt + Long term debt )
11937.8/ (349.9+ 9090.2)
4251.8/ (0+ 3932.6)
1.264584062
1.081167675
1.26
1.08
Free operating cash flow Free operating cash flow to total debt= (Cash from operations - Capital
expenditure)/ (Short term debt + Long term debt )
to total debt
(11937.8-1976.4)/ (349.9+ 9090.2) (4251.8-1519.4)/ (0+ 3932.6)
1.055221873
0.694807506
1.06
0.69
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