Financial Ratios. Here are simplified financial statements for Phone Corporation in a recent year: INCOME STATEMENT (Figures
Question:
Financial Ratios. Here are simplified financial statements for Phone Corporation in a recent year:
INCOME STATEMENT (Figures in S 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 S 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 | 9,724 | 9,121 |
Total liabilities and shareholders’ equity | $27,714 | $27,503 |
Calculate the following financial ratios for Phone Corporation:
a. Return on equity
b. Return on assets
c. Return on capital
d. Days in inventory
e. Inventory turnover
f. Average collection period
g. Operating profit margin
h. Long-term debt ratio
i. Total debt ratio
j. Times interest earned
k. Cash coverage ratio
l. Current ratio
m. Quick ratio
Fundamentals of Corporate Finance
ISBN: 978-0077861629
8th edition
Authors: Richard Brealey, Stewart Myers, Alan Marcus