Use information from the balance sheet and income statement to calculate the following financial ratios and the market value added (MVA).Whenever balance sheet numbers are used to calculate financial ratios, please ensure that you use the average of the 2019 and 2020 numbers in your calculation. To calculate MVA, you can assume that the average book value number for common stock and paid-in-surplus is the amount that the shareholders initially invested in the company. GRIZZLY BEAR MUFFIN COMPANYBalance SheetIncome Statement ($M)Assets ($M)Liabilities & Shareholders' Equity ($M)20192020201920202020Current AssetsCashCurrent LiabilitiesAccounts PayableNotes PayableSales$84,4095,2905,8226,1207,098Cost of goods sold58,21826,191Accounts Receivable3,6566,5172,7383,1682,700Gross ProfitInventoryTotal Current Assets5,58613,614Other Current Liabilities4,088Depreciation7,4103,05515,995Total Current Liabilities12,34313,886EBIT18,781Interest Expense3,281|Long Term Debt19,00022,000Taxable Income15,500Fixed AssetsTaxes (35%)5,425$10,075Shareholders' EquityCommon Stock & paid-in-surplusAccumulated Retained EarningsTotal Shareholders EquityNet Plant and Equipment71,43379,669Net Income9,0009.000Dividends4,00144,704Retained Earnings50,77859,7786,07453,704EPS4.03Total Assets$85,047$95,664Total Liabilities & Shareholders' Equity | $85,047$95,664PE Ratio14.5 Short-term Solvency RatiosCurrent Ratio1.13Quick Ratio0.67NWC to Total Assets0.43Asset UtilizationDays' Sales in Inventory8.93Receivables Turnover23.09Long-term Solvency RatiosEquity MuliplierCash Coverage Ratio0.5927.49Profitability RatiosProfit Margin0.12Return on Equity0.11Market Value RatiosMarket-to-book Ratio??Market Value Added ($M)??

Answered: Use information from the balance sheet…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Use information from the balance sheet and income statement to calculate the following financial ratios and the market value added (MVA).

Whenever balance sheet numbers are used to calculate financial ratios, please ensure that you use the average of the 2019 and 2020 numbers in your calculation. To calculate MVA, you can assume that the average book value number for common stock and paid-in-surplus is the amount that the shareholders initially invested in the company.

GRIZZLY BEAR MUFFIN COMPANY
Balance Sheet
Income Statement ($M)
Assets ($M)
Liabilities & Shareholders' Equity ($M)
2019
2020
2019
2020
2020
Current Assets
Cash
Current Liabilities
Accounts Payable
Notes Payable
Sales
$84,409
5,290
5,822
6,120
7,098
Cost of goods sold
58,218
26,191
Accounts Receivable
3,656
6,517
2,738
3,168
2,700
Gross Profit
Inventory
Total Current Assets
5,586
13,614
Other Current Liabilities
4,088
Depreciation
7,410
3,055
15,995
Total Current Liabilities
12,343
13,886
EBIT
18,781
Interest Expense
3,281
|Long Term Debt
19,000
22,000
Taxable Income
15,500
Fixed Assets
Taxes (35%)
5,425
$10,075
Shareholders' Equity
Common Stock & paid-in-surplus
Accumulated Retained Earnings
Total Shareholders Equity
Net Plant and Equipment
71,433
79,669
Net Income
9,000
9.000
Dividends
4,001
44,704
Retained Earnings
50,778
59,778
6,074
53,704
EPS
4.03
Total Assets
$85,047
$95,664
Total Liabilities & Shareholders' Equity | $85,047
$95,664
PE Ratio
14.5

Short-term Solvency Ratios
Current Ratio
1.13
Quick Ratio
0.67
NWC to Total Assets
0.43
Asset Utilization
Days' Sales in Inventory
8.93
Receivables Turnover
23.09
Long-term Solvency Ratios
Equity Muliplier
Cash Coverage Ratio
0.59
27.49
Profitability Ratios
Profit Margin
0.12
Return on Equity
0.11
Market Value Ratios
Market-to-book Ratio
??
Market Value Added ($M)
??

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Expert Solution

Step 1

Market to book ratio:

This is also called as Price to Book Ratio. This is used to evaluate a company's current market value relative to its book value. The book value is the difference between total assets and total liabilities.

Market Value Added (MVA):

This is the difference between the current market value of the company and the initial investments or capital contributed by investors.

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