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    MA 104 Team Activity

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    Rhema Bashziee
    The document presents financial metrics for a company from 2010 to 2012 compared to industry averages for 2012. It includes ratios such as current ratio, quick ratio, inventory turnover, average collection period, and others. For each ratio, it provides the calculation used to determine the metric for 2012 using figures provided in the document.

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    MA 104 Team Activity

    Uploaded by

    Rhema Bashziee
    39 views5 pages
    The document presents financial metrics for a company from 2010 to 2012 compared to industry averages for 2012. It includes ratios such as current ratio, quick ratio, inventory turnover, average collection period, and others. For each ratio, it provides the calculation used to determine the metric for 2012 using figures provided in the document.

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    The document presents financial metrics for a company from 2010 to 2012 compared to industry averages for 2012. It includes ratios such as current ratio, quick ratio, inventory turnover, average collection period, and others. For each ratio, it provides the calculation used to determine the metric for 2012 using figures provided in the document.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    39 views5 pages

    MA 104 Team Activity

    Uploaded by

    Rhema Bashziee
    The document presents financial metrics for a company from 2010 to 2012 compared to industry averages for 2012. It includes ratios such as current ratio, quick ratio, inventory turnover, average collection period, and others. For each ratio, it provides the calculation used to determine the metric for 2012 using figures provided in the document.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 5

    Answer & solutions:

    2012 Industry
    2010 2011 2012
    Ave.
    Current ratio 1.4 1.55 1.67 1.85
    Quick ratio 1 0.92 0.88 1.05
    Inventory turnover 9.52 9.21 7.89 8.6
    Average collection
    45. days 36.9 days 29.20 days 35.5 days
    period
    Average payment
    59.3 days 61.6 days 52.98 days 46.4 days
    period
    Total asset
    0.74 0.8 0.83 0.74
    turnover
    Debt ratio 0.2 0.2 0.35 0.3
    Times interest
    8.2 7.3 6.50 8
    earned ratio
    Fixed – payment
    4.5 4.2 3.12 4.2
    coverage ratio
    Gross profit
    0.3 0.27 0.25 0.25
    margin
    Operating profit
    0.12 0.12 0.13 0.1
    margin
    Net profit margin 0.062 0.062 0.066 0.053
    Return on total
    0.045 0.05 0.055 0.04
    assets (ROA)

    Return on
    common equity 0.061 0.06 0.078 0.066
    (ROE)

    Earnings per share


    $1.75 $2.20 $3.05 $1.50
    (EPS)
    Price/earnings
    12 10.5 12.95 11.2
    (P/E) ratio
    Market/book
    1.2 1.05 1.013 1.1
    (M/B) ratio
    Current Ratio = current assets / current liabilities

    Current Ratio = $2,000,000/ $1,200,000

    Current Ratio = 1.67

    Quick Ratio = quick assets/ current liabilities

    Quick Ratio = $1,050,000/ $1,200,000

    Quick Ratio = 0.875/ 0.88

    Inventory Turnover = cost of goods sold/ inventory

    Inventory Turnover= $7,500,000/ $950,000

    Inventory Turnover =7.89

    Average collection period= accounts receivable /net sales * 365 days

    Average collection period = $ 800,000/ $10,000,000 x 365

    Average collection period = 0.08 x 365

    Average collection period = 29.2 days

    Average payment period = $900,000/ $6,200,000 x 365

    Average payment period = 0.1451612903 x 365

    Average payment period = 52.98 days

    Total asset turnover = net sales/ total assets

    Total asset turnover = $ 10,000,000/ $12,000,000

    Total asset turnover = 0.83


    Debt Ratio = total debt / total assets debt ratio

    = 4,200,000/12,000,000

    Debt ratio = 0.35

    Times interest earned ratio = operating profit/ times interest earned ratio

    = 1,300,000/ 200,000

    Times interest earned ratio = 6.5

    Fixed payment coverage ratio = operating profit + fixed charges / fixed charges + interest

    = $1,300,000 + $ 50,000 / $50,000 + $ 200,000

    = $1,350,000/ $250,000

    Fixed payment coverage ratio=5.4

    Gross profit margin = gross profit / net sales

    = $2,500,000 / $10,000,000

    Gross profit margin = 0.25

    Operating profit margin = operating income / revenues

    = $1,300,000 / $10,000,000

    Operating profit margin = 0.13

    Net profit margin = net income / total sales revenue

    = $660,000 / $ 10,000,000

    Net profit margin =0.066


    Return on total assets = net income / total assets

    = $660,000/ $12,000,0000

    Return on total assets = 0.055

    Return on common equity = earnings available for common stocksholder / shareholder’s equity

    = $610,000/ $7,800,000

    Return on common equity = 0.078

    Price/ earnings ratio = share price / earnings per share

    = $39.50 / $3.05

    Price ratio / earnings= 12.95

    Book value per share= total shareholder’s equity / outstanding shares

    = $ 7,800,000/ $200,000

    Book value per share= 39

    Market/book ratio = market value per share / book value per share

    = $39.50/ $39

    Market/ book ratio= 1.013

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