Compute and Interpret Altman's Z-scoresFollowing is selected financial information for Netflix, for 2018 and 2017.E4-28.$ thousands, except per share data20182017Current assets$ 9,694,135 $ 7,669,974...Current liabilities..Total assets ..Total liabilities..Shares outstanding.Retained earningsStock price per share6,487,32025,974,4005,466,31219,012,742... .20,735,635436,598,59715,430,786433,392,6862,942,3591,731,117267.66191.96Sales....15,794,3411,605,22611,692,713Earnings before interest and taxes..838,679Requireda. Compute and compare the Altman Z-scores for both years. What explains the apparent trend?b. Is the company more likely to go bankrupt given the Z-score in 2018 compared to 2017? Explain.

Altman Z scores are used to find out whether a company is headed towards bankruptcy. The lower the…

E4-28. Compute and Interpret Altman's Z-scores Following is selected financial information for Netflix, for 2018 and 2017. S thousands, except per share data 2018 2017 $ 9,694,135 6,487,320 25,974,400 $ 7,669,974 5,466,312 19,012,742 Current assets Current liabilities. Total assets . ..... Total liabilities... 20,735,635 436,598,597 15,430,786 433,392,686 Shares outstanding.. Retained earnings Stock price per share. Sales..... ..... 2,942,359 1,731,117 ... 267.66 191.96 15,794,341 11,692,713 Earnings before interest and taxes.. 1,605,226 838,679 Required a. Compute and compare the Altman Z-scores for both years. What explains the apparent trend? b. Is the company more likely to go bankrupt given the Z-score in 2018 compared to 2017? Explain.

E4-28. Compute and Interpret Altman's Z-scores Following is selected financial information for Netflix, for 2018 and 2017. S thousands, except per share data 2018 2017 $ 9,694,135 6,487,320 25,974,400 $ 7,669,974 5,466,312 19,012,742 Current assets Current liabilities. Total assets . ..... Total liabilities... 20,735,635 436,598,597 15,430,786 433,392,686 Shares outstanding.. Retained earnings Stock price per share. Sales..... ..... 2,942,359 1,731,117 ... 267.66 191.96 15,794,341 11,692,713 Earnings before interest and taxes.. 1,605,226 838,679 Required a. Compute and compare the Altman Z-scores for both years. What explains the apparent trend? b. Is the company more likely to go bankrupt given the Z-score in 2018 compared to 2017? Explain.

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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Compute and Compare ROE, ROA, and RNOA Graphical representations of the KLA-Tencor 2018 income statement and average balance sheet numbers (2017-2018) follow ($thousands). KLA-Tencor Average Balance Sheet 2017-2018 $1,473,464 $2.583,930 -$2,627,235.5 $1,518,371 Operating assets Nonoperating assets Operating labilities Nonoperating abis Equity + -$2,948,529 Check OS 05 KLA-Tencor Income Statement 2018 $802,265 ė $653,666- Note: Assume a statutory tax rate of 22%. a. Compute return on equity (ROE). Note: 1. Select the appropriate numerator and denominator used to compute ROE from the drop-down menu options. 2. Enter the numerator and denominator amounts to compute ROE. Denominator Numerator ROE $81,263 05 Operating expenses Tax expense b. Compute return on assets (ROA). Note: 1. Select the appropriate numerator and denominator used to compute ROA from the drop-down menu options. 2. Enter the numerator and denominator amounts to compute ROA. Numerator Denominator ROA -$2.499.507 +…
Compute and Interpret Coverage, Liquidity and Solvency Ratios Selected balance sheet and income statement information from Amazon for 2016 through 2018 follows. $ millions 2018 2017 2016 Net operating profit after tax (NOPAT) $10,978 $3,222 $2,556 Net income 10,073 3,033 2,371 Operating profit 12,421 4,106 4,186 Interest expense 1,417 848 484 Cash from operating activities 30,723 18,365 17,203 Current assets 75,101 60,197 45,781 Current liabilities 68,391 57,883 43,816 Cash and cash equivalents 31,750 20,522 19,334 Marketable securities 9,500 10,464 6,647 Total debt 23,495 24,743 7,694 Assets 162,648 131,310 83,402 Liabilities 119,099 103,601 64,117 Equity 43,549 27,709 19,285 Net operating assets (NOA) 25,794 21,466 998 a. Compute profitability measures RNOA and ROE for 2018 and 2017. In which year are the measures stronger?Round answers to one decimal place (ex: 0.2345 = 23.5%). 2018 2017 RNOA Answer Answer ROE Answer…
Selected balance sheet and income statement information for Home Depot follows. $ millions Operating assets Jan. 31, 2016 Feb. 01, 2015 $40,333 $38,223 Nonoperating assets 2,216 1,723 Total assets 42,549 39,946 Operating liabilities 14,918 13,427 Nonoperating liabilities 21,315 17,197 Total liabilities 36,233 30,624 Total stockholders' equity 6.316 9.322 Sales 88,519 Net operating profit before tax (NOPBT) 11,774 Non-operating expense before tax 753 Tax expense 4,012 Net income 7,009 Compute the return on equity for the year ended January 31, 2016. You want your all-equity (no debt) firm to provide a return on equity of 13.5%. If total assets are $375,000, how much must be generated in net income to make this target? a. $41,234 b. $43,405 c. $45,689 d. $48,094 e. $50,625 For the FY 2016, Alpha Company had net sales of $950,000 and a net income of $65,000, paid income taxes of $30,000, and had before-tax interest expense of $15,000. Use this information to determine the: 1. Times…
Pizza, Inc. balance sheet statement for December 31. 2015 with the following information tound to the nearest thousand i Data Table Barron Pizza, Inc. Balance Sheet as of Decemb Retained earnings: $43,512 Accounts payable: $74,547 Accounts receivable: $34,808 Common stock: $119,856 Cash: $8,258 Short-term debt $188 ($ in thousands) LIABILIT Current Inventory: $23,487 Goodwill: $48,302 Long-term debt S80,147 Other noncurrent liabilities: $42,597 Net plant, property, and equipment. $192,340 Other noncurrent assets.$16,738 Long-term investments: $22,330 Other current assets: $14,584 Total cur Total liat OWNER! Print Done a意前 %24 %24 %24 %24 %24
Return on total assets ratio: net income/ avg. total assets 21,331/(321,195+225,248)/2= 0.07807= 7.8% (Amazon 2020 year) 6.0% (Amazon 2019 year) 6.37% (Walmart 2020 year) Write financial analysis report.
Use the following information to answer questions 1 - 8 Consider the following abbreviated financial statements for Xinghua: XINGHUA 2014 and 2015 Partial Balance Sheets Assets Liabilities and Owners Equity 2014 2015 2014 2015 Current assets $ 924 $ 1,002 Current liabilities $ 370 $ 428 Net fixed assets 3,917 4,556 Long-term debt 2, 006 2, 142 Equity 2,465 2,988 XINGHUA 2015 Income Statement Sales $ 11,295 Costs 5,535 Depreciation 1,020 Interest paid 180 The tax rate is 35%. Long term debt trades at 128% of par. The firm has 500 shares outstanding. Free Cash Flow to the Firm and the Free Cash Flow to Equity are both expected to grow at 2% forever. The weighted average cost of capital is 16%. The cost of equity is 24%.1. What is the change in net working capital for 2015? $ 2. What is the change in gross fixed assets, i. e. capital expenditures, for 2015? $_ What is the Net Income for 2015? $ 3. 4. What is the Free Cash Flow to the Firm for 2015? $ What is the Value of the Firm…

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