Chapter 11, Problem 11.14P

Problem 11.14

Ratio analysis-comprehensive problem, 2014 data This problem is based on the 2014 annual report of Campbell Soup Company in the appendix.

Required:

1. Compute the following profitability measures for the year ended August 3, 2014:
1. Return on investment, based on net earnings (perform a DuPont analysis).
2. Return on equity⁷, based on net earnings and total equity.
3. Price/earnings ratio. Use $41.96 as the year-end market price.
4. Dividend yield.
5. Dividend payout ratio.
2. Compute the following liquidity measures at August 3, 2014:
1. Working capital.
2. Current ratio.
3. Acid-test ratio.
3. Compute the following activity measures for the year ended August 3, 2014:
1. Number of days" sales in accounts receivable, based on a 365-day year.
2. Number of days’ sales in inventory, based on a 365-day year.
3. Accounts receivable turnover.
4. Inventory turnover.
5. Turnover of net property, plant, and equipment.
4. Compute the following financial leverage measures at August 3, 2014:
1. Debt ratio.
2. Debt/equity ratio.
5. Compute the following physical measures of Campbell’s profitability at August 3, 2014:
1. Net sales per employee.
2. Operating income per employee. (Note: In a page not reproduced in the appendix, Campbell’s 2014 annual report disclosed that on August 3, 2014, the company had approximately 19,400 employees.)