The person in charge of the finances of the company MGT, SA wants to know the company's situation concerning the industrial sector to which it belongs. For this, it has the following information regarding the industry: The general liquidity ratio is 1.55; the acid test is 1.20, and the ratio between the available and the current liabilities is 0.95. The debt ratio stands at 1.25. The margin on sales is 21%. The investment rotation is 1.45 times. Economic profitability is around 23%, and financial profitability is 29% The data referred to the company (in thousands of €) are the following: Assets Liability and net equity Non-current assets (Net) 170 Equity 125 Stocks of finished products 45 Reservations 25 Clients 65 External resources 105 Banks 70 Loans 65 Suppliers 30 Total Assets 350 Total Net Equity 350 In addition, it is known that: Sales are € 250,000 and its direct cost of € 105,000. Amortization of € 70,000. Long-term debt generates interest at 5%, short-term bank loans at 7%, and the departure of suppliers does not accrue any interest. The Corporation Tax is 25%. Calculate the liquidity, acid test, and debt ratios, and compare them with the sector data. It also calculates the economic and financial returns, and the margin on sales and investment rotation, even making a comparison between the company and sector.
The person in charge of the finances of the company MGT, SA wants to know the company's situation concerning the industrial sector to which it belongs. For this, it has the following information regarding the industry: The general liquidity ratio is 1.55; the acid test is 1.20, and the ratio between the available and the current liabilities is 0.95. The debt ratio stands at 1.25. The margin on sales is 21%. The investment rotation is 1.45 times. Economic profitability is around 23%, and financial profitability is 29% The data referred to the company (in thousands of €) are the following: Assets Liability and net equity Non-current assets (Net) 170 Equity 125 Stocks of finished products 45 Reservations 25 Clients 65 External resources 105 Banks 70 Loans 65 Suppliers 30 Total Assets 350 Total Net Equity 350 In addition, it is known that: Sales are € 250,000 and its direct cost of € 105,000. Amortization of € 70,000. Long-term debt generates interest at 5%, short-term bank loans at 7%, and the departure of suppliers does not accrue any interest. The Corporation Tax is 25%. Calculate the liquidity, acid test, and debt ratios, and compare them with the sector data. It also calculates the economic and financial returns, and the margin on sales and investment rotation, even making a comparison between the company and sector.
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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The person in charge of the finances of the company MGT, SA wants to know the company's situation concerning the industrial sector to which it belongs. For this, it has the following information regarding the industry:
- The general liquidity ratio is 1.55; the acid test is 1.20, and the ratio between the available and the current liabilities is 0.95.
- The debt ratio stands at 1.25. The margin on sales is 21%. The investment rotation is 1.45 times.
- Economic profitability is around 23%, and financial profitability is 29%
The data referred to the company (in thousands of €) are the following:
|
Assets |
|
Liability and net equity |
|
|
Non-current assets (Net) |
170 |
Equity |
125 |
|
Stocks of finished products |
45 |
Reservations |
25 |
|
Clients |
65 |
External resources |
105 |
|
Banks |
70 |
Loans |
65 |
|
|
|
Suppliers |
30 |
|
Total Assets |
350 |
Total Net Equity |
350 |
In addition, it is known that:
- Sales are € 250,000 and its direct cost of € 105,000.
- Amortization of € 70,000.
- Long-term debt generates interest at 5%, short-term bank loans at 7%, and the departure of suppliers does not accrue any interest.
- The Corporation Tax is 25%.
Calculate the liquidity, acid test, and debt ratios, and compare them with the sector data. It also calculates the economic and financial returns, and the margin on sales and investment rotation, even making a comparison between the company and sector.
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