Class book: Fundamentals of Corporate Finance by Brealey, Myers, and Marcus Financial Ratios. Here are simplified financial statements for Phone Corporation in 2017: Income Statement (Figures in $ millions) Net Sales $13,193 Cost of goods sold 4,060 Other expenses 4,049 Depreciation 2,518 Earnings before interest and taxes (EBIT) $2,566 Interest expense 685 Income before tax $1,881 Taxes (at 35%) 658 Net income $1,223 Dividends 856 Balance Sheet (Figures in $ millions) End of Year Start of Year Assets Cash and marketable securities $ 89 $ 158 Receivables 2,382 2,490 Inventories 187 238 Other current assets 867 932 Total current assets $ 3,525 $ 3,818 Net property, plant, and equipment 19,973 19,915 Other long-term assets 4,216 3,770 Total assets $27,714 $27,503 Liabilities and Shareholders' equity Payables $ 2,564 $ 3,040 Short-term debt 1,419 1,573 Other current liabilities 811 787 Total current liabilities $ 4,794 $ 5,400 Long-term debt and leases 7,018 6,833 Other long-term liabilities 6,178 6,149 Shareholders' equity 9,7224 9,121 Total liabilities and shareholders' equity $ 27,714 $ 27,503 Calculate the following financial ratios fo Phone Corporation using the methodologies listed for each part: a. return on equity (use average balance sheet figures) b. return on assets (use average balance sheet figures) c. return on capital (use average balance sheet figures) d. days in inventory (use start-of-year balance sheet figures) e. inventory turnover (use start-of-year balance sheet figures) f. average collection period (use start-of-year balance sheet figures) g. operating profit margin
Class book: Fundamentals of
Financial Ratios. Here are simplified financial statements for Phone Corporation in 2017:
|
Income Statement (Figures in $ millions) |
|
Net Sales $13,193 Cost of goods sold 4,060 Other expenses 4,049 Earnings before interest and taxes (EBIT) $2,566 Interest expense 685 Income before tax $1,881 Taxes (at 35%) 658 Net income $1,223 Dividends 856 |
|
(Figures in $ millions) |
| End of Year Start of Year |
|
Assets Cash and marketable securities $ 89 $ 158 Receivables 2,382 2,490 Inventories 187 238 Other current assets 867 932 Total current assets $ 3,525 $ 3,818 Net property, plant, and equipment 19,973 19,915 Other long-term assets 4,216 3,770 Total assets $27,714 $27,503 Liabilities and Shareholders' equity Payables $ 2,564 $ 3,040 Short-term debt 1,419 1,573 Other current liabilities 811 787 Total current liabilities $ 4,794 $ 5,400 Long-term debt and leases 7,018 6,833 Other long-term liabilities 6,178 6,149 Shareholders' equity 9,7224 9,121 Total liabilities and shareholders' equity $ 27,714 $ 27,503 |
Calculate the following financial ratios fo Phone Corporation using the methodologies listed for each part:
a.
b.
c. return on capital (use average balance sheet figures)
d. days in inventory (use start-of-year balance sheet figures)
e. inventory turnover (use start-of-year balance sheet figures)
f. average collection period (use start-of-year balance sheet figures)
g. operating profit margin
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