year 4 year 3 year 2  current ratio     1.6 1.5 quick ratio     1.2 1.1 operating cash flow to current liabilites ratio     0.479 0.548 days accounts receivable outstanding     68 73 days inventory held     51 68 days accounts payable outstanding     47 49 net days of working capital financing needed     72 91 liabilities to assets ratio     0.556 0.621 liabilities to shareholders' equity ratio     1.251 1.639 long term debt to long term capital ratio     0.328 0.418 long term debt tp shareholders' equity ratio     0.489 0.72 operating cash flow to total liabilities ratio     0.245 0.238 interst coverage ratio     5.6 2.3   c. asses the changes in the long term solvency risk between year 2 and year 4 and the level of that risk at the end of year 4.   operations year 4 year 3 year 2 net income $196 175 75 depreciation and amortization 146 164 184 addbacks and subtractions,net 17 68 (67) (increase) Decrease in accounts receivable 76 (13) 34 (increase) Decrease in inventories (16) 35 39 (increase) decrease in prepayments 29 8 185 increase(decrease) in acccounts payable and other current liabililties (90) 17 23 cash flow from  operations $358 454 473 investing       property, plant, and equipment acquired (79) (63) (59) other investing transactions (6) (2) (3) cash flow from investing (85) (65) (62) financing       increase in common stock $3 40 3 decrease in short term borrowing (7)   (15) decrease in long term borrowing (58) (389) (127) acquisition of common stock    (3)   dividends (37) (21) (21) other financing transactions  7 9 12 cash flow from financing (69) (364) -148 change in cash 204 25 263 cash -beginning of year 521 496 233 cash - end of year 725 521 496               year 4 year 3 year 2         sales $2,998 $3,139 $2,816 cost of goods sold (1252) (1288) (1099) selling and administrative expenses       advertising (387) (364) (297) research and development (157) (143) (154) royalty expense (223) (248) (296) other selling and administrative (687) (799) (788)         interest expense (32) (53) (78) income tax expense (64) (69) (29) Net income $196 $175 $75             year 4 year 3 year 2 year 1 Assets         cash $725 $521 $496 $233 Accounts  receivable 579 607 555 572 inventories 195 169 190 217 prepayments 219 212 191 346 total current assets $1,718 $1,509 $1,432 $1,368 other assets 1316 1454 1498 1765 total assets $3,241 $3,163 $3,143 $3,369 liabilities and shareholders' equity         accounts payable $168 $159 $166 $123 short term borrowing 342 24 223 36 other current liabilities $639 $747 $578 $599 total current liabilities $1,149 $930 967 $758 long term debt $303 $687 $857 $1,166 other non current liabilites $149 $141 128 $92 total liabilities $1,601 $1,748 $1,952 $2,016 comon stock $105 $105 $105 $105 additional paid in capital $381 $398 $458 $455 retained earnings $1,721 $1,567 $1,430 $1,622 accumulated other          comprehensive income (loss) $82 $30 ($47) ($68) treasury stock ($649) ($695) ($755) ($761) total shareholders' equity $1,640 $1,405 $1,191 $1,353 total liabilities and shareholder' equity $3,241 $3,163 $3,143 $3,369

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
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year 4 year 3 year 2 
current ratio     1.6 1.5
quick ratio     1.2 1.1
operating cash flow to current liabilites ratio     0.479 0.548
days accounts receivable outstanding     68 73
days inventory held     51 68
days accounts payable outstanding     47 49
net days of working capital financing needed     72 91
liabilities to assets ratio     0.556 0.621
liabilities to shareholders' equity ratio     1.251 1.639
long term debt to long term capital ratio     0.328 0.418
long term debt tp shareholders' equity ratio     0.489 0.72
operating cash flow to total liabilities ratio     0.245 0.238
interst coverage ratio     5.6 2.3

 

c. asses the changes in the long term solvency risk between year 2 and year 4 and the level of that risk at the end of year 4.

 

operations year 4 year 3 year 2
net income $196 175 75
depreciation and amortization 146 164 184
addbacks and subtractions,net 17 68 (67)
(increase) Decrease in accounts receivable 76 (13) 34
(increase) Decrease in inventories (16) 35 39
(increase) decrease in prepayments 29 8 185
increase(decrease) in acccounts payable and other current liabililties (90) 17 23
cash flow from  operations $358 454 473
investing      
property, plant, and equipment acquired (79) (63) (59)
other investing transactions (6) (2) (3)
cash flow from investing (85) (65) (62)
financing      
increase in common stock $3 40 3
decrease in short term borrowing (7)   (15)
decrease in long term borrowing (58) (389) (127)
acquisition of common stock    (3)  
dividends (37) (21) (21)
other financing transactions  7 9 12
cash flow from financing (69) (364) -148
change in cash 204 25 263
cash -beginning of year 521 496 233
cash - end of year 725 521 496
       

 

 

  year 4 year 3 year 2
       
sales $2,998 $3,139 $2,816
cost of goods sold (1252) (1288) (1099)
selling and administrative expenses      
advertising (387) (364) (297)
research and development (157) (143) (154)
royalty expense (223) (248) (296)
other selling and administrative (687) (799) (788)
       
interest expense (32) (53) (78)
income tax expense (64) (69) (29)
Net income $196 $175 $75
       

 

  year 4 year 3 year 2 year 1
Assets        
cash $725 $521 $496 $233
Accounts  receivable 579 607 555 572
inventories 195 169 190 217
prepayments 219 212 191 346
total current assets $1,718 $1,509 $1,432 $1,368
other assets 1316 1454 1498 1765
total assets $3,241 $3,163 $3,143 $3,369
liabilities and shareholders' equity        
accounts payable $168 $159 $166 $123
short term borrowing 342 24 223 36
other current liabilities $639 $747 $578 $599
total current liabilities $1,149 $930 967 $758
long term debt $303 $687 $857 $1,166
other non current liabilites $149 $141 128 $92
total liabilities $1,601 $1,748 $1,952 $2,016
comon stock $105 $105 $105 $105
additional paid in capital $381 $398 $458 $455
retained earnings $1,721 $1,567 $1,430 $1,622
accumulated other         
comprehensive income (loss) $82 $30 ($47) ($68)
treasury stock ($649) ($695) ($755) ($761)
total shareholders' equity $1,640 $1,405 $1,191 $1,353
total liabilities and shareholder' equity $3,241 $3,163 $3,143 $3,369
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