04 TP Financial
04 TP Financial
Compute the following financial ratios and interpret the results (Low, High, OK) based on the given industry averages. Write your answers on the spaces
provided.
Industry
Ratio Formula Calculation Comment
Average
Current
Current Assets 1,000,000 4.2
LOW
Current liabilities =3.23
310,000
Quick
Current Assets – Inventories 385,000 2.2
LOW
Current liabilities =1.24
310,000
Inventory turnover
Sales 3,000,000 10.9
LOW
Inventories =4.88
615,000
Industry
Ratio Formula Calculation Comment
Average
Times-interest-earned
EBIT 283,000 6.0
LOW
Interest Changes =3.21
88,000
Operating margin
EBIT 283,800 10.0%
OK
Sales =0.0943∨9.43%
3,000,000
Profit margin
Net Income 117,500 5.0%
LOW
Sales =0.391∨3.92
3,000,000