Activity No.3 - Solve the Problem

Financial Statement Analysis

Selected financial date for Black & Decker and Snap-On Tools for 2003 are presented here (in millions)

Black & Decker

Snap-On Tools

Income Statement Data for Year

Net Sales

$4,482.70

$2,233.20

Cost of goods sold

2,887.10

1,268.50

Selling and Administrative expenses 1,126.00

814.60

Interest Expense

35.20

24.40

Other income (Expense)

(34.20)

(9.00)

Income Tax Expense

107.20

38.00

Net Income (before irregular items) $293.00

$78.70

Balance Sheet Data (End of Year)

Current assets

$2,203.00

1,131.70

Property,plant,and equipment (net) 660.20

328.60

Other assets

1,359.30

678.20

Total assets

$4,222.50

$2,138.50

Current liabilities

1,312.10

567.20

Long-term debt

2,063.90

560.40

Total stockholder's equity

846.50

1,010.90

Total liabilities and stockholder's equity $4,222.50

$2,138.50

Beginning-of-Year Balances

Total assets

$4,130.50

$1,994.10

Total stockholder's equity

599.60

830.40

Current liabilities

1,453.40

552.40

Total liabilities

3,530.90

1,163.70

Other Data

Average receivables (net)

$762.10

551.50

Average inventory

717.80

360.50

Net cash provided by operating activities 570.60

177.00

Instructions (Round all computationsto 2 decimal place.)

(a) For each company,compute the following ratios.

(1) Current ratio

(2) Receivables turnover

(3) Average collection period

(4) Inventory turnover

(5) Days in inventory

(6) Profit Margin

(7) Asset turnover

(8)Return on assetsNet Income

'Average total Assets

(9) Average total Assets

(10) Debt to total assets

(11) Times interest earned

(12) Current Cash debt coverageCash provided by operating activities

Average current Liabilities

(13) Cash Debt coverageCash provided by operating activities

Average current Liabilities

(b) Compare the liquidity,solvency,and profitability of the two companies