Why Work With Financial Statements? Problems with Financial Statement Analysis. Calculating Ratios and Analyzing with Ratios. Why do we use Ratios to Analyze Financial Statements
CA = CL = CA/CL = CA/CL =
Example 2: Common Sized Financial Statements. I/S I/S 100 Net Sales 25 COGS 15 Other Ex 60 EBIT 10 Int 17 Tax 33 NI Example 3: Ratios allow us to see relationships between numbers. $ 5,000.00 $ 200.00 Meaning:
Example 4: We can see trends over time without the distortions of different number sizes. Cash 2001 = $ 200.00 Total Assets 2001 = $ 2,000.00 Cash 2008 = $ 600.00 Total Assets 2008 = $ 5,000.00 2001 Cash/TA = 2008 Cash/TA = Meaning: Example 5: We can compare small and big companies without the distortions of different number sizes. 23 B. 63 B. 11 B. 19 B.
MFST Cash = MFST TA = GOOG Cash = GOOG TA = MFST Cash/TA = GOOG Cash/TA =
Meaning:
Example 6: We can compare Financial Statements that are in different currencies. Company 1 Equity = $ 1,018.74 Company 1 TA = $ 2,037.49 Company 2 Equity = 500.00 Company 2 TA = 1,000.00 Company 1 TA/E =
Meaning:
nt number sizes.
CA = CL = CA/CL = CA/CL =
Example 1: What is a Ratio? $ 200.00 $ 100.00 $2CA/$1CL Meaning: 2 Example 2: Common Sized Financial Statements. I/S I/S 100 Net Sales 25 COGS 15 Other Ex 60 EBIT 10 Int 17 Tax 33 NI
Example 3: Ratios allow us to see relationships between numbers. $ 5,000.00 $ 200.00 $0.04 NI/ $1 Sales Meaning: For every $1 that comes in the door, $0.04 is the pro 0.04
Example 4: We can see trends over time without the distortions of different number sizes. Cash 2001 = $ 200.00 Total Assets 2001 = $ 2,000.00 Cash 2008 = $ 600.00 Total Assets 2008 = $ 5,000.00 2001 Cash/TA = 10.00% Although cash is 3 times bigger in 2008, as a percent of total as 2008 Cash/TA = 12.00% Meaning: was 10%, but in 2008 it was only 12%.
Example 5: We can compare small and big companies without the distortions of different number sizes. MFST Cash = 23 B. MFST TA = 63 B. GOOG Cash = 11 B. GOOG TA = 19 B. MFST Cash/TA = 37% Although MSFT has twice as much cash as GOOG, MSFT has on GOOG Cash/TA = 58% Meaning: assets in cash, compared to GOOG's 58% Example 6: We can compare Financial Statements that are in different currencies. Company 1 Equity = $ 1,018.74 Company 1 TA = $ 2,037.49 Company 2 Equity = 500.00 Company 2 TA = 1,000.00 Company 1 TA/E = $2 Assets / $1 Equity
of CL we have $2 of CA.
$1.00
nt number sizes.
ch cash as GOOG, MSFT has only 37% of its compared to GOOG's 58%
PERIOD ENDING Net Sales COGS Selling General and Administrative Depreciation and Amortization Income from Continuing Operations Total Other Income/Expenses Net Earnings Before Interest And Taxes Interest Expense Income Before Tax Income Tax Expense Net Income Dividends Add To Retained Earnings
Sep 24, 2006 5,607,376.00 3,647,734.00 1,484,410.00 156,223.00 319,009.00 20,736.00 339,745.00 32.00 339,713.00 135,885.00 203,828.00 358,075 (154,247.00)
Wholefoods Market Income Statement ($000) % Terms Sep 25, 2005 4,701,289.00 3,052,184.00 1,285,613.00 133,759.00 229,733.00 9,623.00 239,356.00 2,223.00 237,133.00 100,782.00 136,351.00
% Terms
Sep 26, 2004 % Terms 3,864,950.00 2,523,816.00 1,004,089.00 115,157.00 221,888.00 6,456.00 228,344.00 7,249.00 221,095.00 88,438.00 132,657.00
nt of sales.
PERIOD ENDING Net Sales COGS Selling General and Administrative Depreciation and Amortization Income from Continuing Operations Total Other Income/Expenses Net Earnings Before Interest And Taxes Interest Expense Income Before Tax Income Tax Expense Net Income Dividends Add To Retained Earnings
Sep 24, 2006 5,607,376.00 3,647,734.00 1,484,410.00 156,223.00 319,009.00 20,736.00 339,745.00 32.00 339,713.00 135,885.00 203,828.00 358,075 (154,247.00)
Wholefoods Market Income Statement ($000) % Terms Sep 25, 2005 100.00% 4,701,289.00 65.05% 3,052,184.00 26.47% 1,285,613.00 2.79% 133,759.00 5.69% 229,733.00 0.37% 9,623.00 6.06% 239,356.00 0.00% 2,223.00 6.06% 237,133.00 2.42% 100,782.00 3.63% 136,351.00
PERIOD ENDING Net Sales COGS Selling General and Administrative Depreciation and Amortization Income from Continuing Operations Total Other Income/Expenses Net Earnings Before Interest And Taxes Interest Expense Income Before Tax Income Tax Expense Net Income Dividends Add To Retained Earnings
Dec 31, 2006 40,185,000.00 28,604,000.00 8,989,800.00 991,400.00 1,599,800.00 36,300.00 1,563,500.00 132,033.33 1,431,466.67 486,699.00 944,767.67 96,000 848,767.67
Safeway Income Statement ($000) % Terms Dec 31, 2005 100.00% 38,416,000.00 71.18% 27,303,100.00 22.37% 8,965,500.00 2.47% 932,700.00 3.98% 1,214,700.00 0.09% 36,900.00 3.89% 1,177,800.00 0.33% 134,200.00 3.56% 1,043,600.00 1.21% 354,824.00 2.35% 688,776.00
% Terms 100.00% 64.92% 27.35% 2.85% 4.89% 0.20% 5.09% 0.05% 5.04% 2.14% 2.90%
Sep 26, 2004 % Terms 3,864,950.00 100.00% 2,523,816.00 65.30% 1,004,089.00 25.98% 115,157.00 2.98% 221,888.00 5.74% 6,456.00 0.17% 228,344.00 5.91% 7,249.00 0.19% 221,095.00 5.72% 88,438.00 2.29% 132,657.00 3.43%
% Terms 100.00% 71.07% 23.34% 2.43% 3.16% 0.10% 3.07% 0.35% 2.72% 0.92% 1.79%
Dec 31, 2004 % Terms 35,822,900.00 100.00% 25,227,600.00 70.42% 8,527,900.00 23.81% 894,600.00 2.50% 1,172,800.00 3.27% 32,300.00 0.09% 1,140,500.00 3.18% 137,066.67 0.38% 1,003,433.33 2.80% 341,167.00 0.95% 662,266.33 1.85%
PERIOD ENDING Assets Current Assets Net Fixed Assets Total Assets Liabilities Current Liabilities Long Term Debt Total Liabilities Stockholders' Equity Common stock and paid-in surplus Retained Earnings Total Stockholder Equity Total Stockholder Equity and Total Liabilities
Wholefoods Market Income Statement ($000) Sep 24, 2006 % Terms 623,981 30.54% 1,419,015 69.46% 2,042,996 100.00% 509,770 129,083 638,853 24.95% 6.32% 31.27%
Sep 25, 2005 % Terms 672,529 35.60% 1,216,767 64.40% 1,889,296 100.00% 418,383 105,237 523,620 22.14% 5.57% 27.72%
Sep 26, 2004 % Terms 485,572 31.37% 1,062,144 68.63% 1,547,716 100.00% 334,950 244,111 579,061 21.64% 15.77% 37.41%
PERIOD ENDING Assets Current Assets Net Fixed Assets Total Assets Liabilities Current Liabilities Long Term Debt Total Liabilities Stockholders' Equity Common stock and paid-in surplus Retained Earnings Total Stockholder Equity Total Stockholder Equity and Total Liabilities
Wholefoods Market Income Statement ($000) Sep 24, 2006 % Terms 623,981 30.54% 1,419,015 69.46% 2,042,996 100.00% 509,770 129,083 638,853 24.95% 6.32% 31.27%
Sep 25, 2005 % Terms 672,529 35.60% 1,216,767 64.40% 1,889,296 100.00% 418,383 105,237 523,620 22.14% 5.57% 27.72%
Sep 26, 2004 % Terms 485,572 31.37% 1,062,144 68.63% 1,547,716 100.00% 334,950 244,111 579,061 21.64% 15.77% 37.41%
PERIOD ENDING Net Sales COGS Selling General and Administrative Depreciation and Amortization Income from Continuing Operations Total Other Income/Expenses Net Earnings Before Interest And Taxes Interest Expense Income Before Tax Income Tax Expense Net Income Dividends Add To Retained Earnings
Wholefoods Market Income Statement ($000) Sunday, September 24, 2006 5,607,376.00 3,647,734.00 1,484,410.00 156,223.00 319,009.00 20,736.00 339,745.00 32.00 339,713.00 135,885.00 203,828.00 358,075 (154,247.00) Wholefoods Market Balance Sheet ($000) Sunday, September 24, 2006
PERIOD ENDING Assets Cash Account Receivable Inventory Other Total Current Assets Net Fixed Assets Total Assets Liabilities Accounts Payable Other Total Current Liabilities Long Term Debt Total Liabilities Stockholders' Equity Common stock and paid-in surplus Retained Earnings Total Stockholder Equity Total Stockholder Equity and Total Liabilities
256,164 82,137 203,727 81,953 623,981 1,419,015 2,042,996 121,857 387,913 509,770 129,083 638,853 1,054,883 349,260 1,404,143 2,042,996 TRUE
9/24/2006 9/25/2005 Sunday, September 25, 2005 4,701,289.00 3,052,184.00 1,285,613.00 133,759.00 229,733.00 9,623.00 239,356.00 2,223.00 237,133.00 100,782.00 136,351.00
54,683
81,668.00
Sunday, September 25, 2005 345,446 66,682 174,848 85,553 672,529 1,216,767 1,889,296 103,348 315,035 418,383 105,237 523,620 879,377 486,299 1,365,676 1,889,296 TRUE
PERIOD ENDING Net Sales COGS Selling General and Administrative Depreciation and Amortization Income from Continuing Operations Total Other Income/Expenses Net Earnings Before Interest And Taxes Interest Expense Income Before Tax Income Tax Expense Net Income Dividends Add To Retained Earnings
Wholefoods Market Income Statement ($000) Sunday, September 24, 2006 5,607,376.00 3,647,734.00 1,484,410.00 156,223.00 319,009.00 20,736.00 339,745.00 32.00 339,713.00 135,885.00 203,828.00 358,075 (154,247.00) Wholefoods Market Balance Sheet ($000) Sunday, September 24, 2006
PERIOD ENDING Assets Cash Account Receivable Inventory Other Total Current Assets Net Fixed Assets Total Assets Liabilities Accounts Payable Other Total Current Liabilities Long Term Debt Total Liabilities Stockholders' Equity Common stock and paid-in surplus Retained Earnings Total Stockholder Equity Total Stockholder Equity and Total Liabilities
256,164 82,137 203,727 81,953 623,981 1,419,015 2,042,996 121,857 387,913 509,770 129,083 638,853 1,054,883 349,260 1,404,143 2,042,996 TRUE
9/24/2006 9/25/2005 Sunday, September 25, 2005 4,701,289.00 3,052,184.00 1,285,613.00 133,759.00 229,733.00 9,623.00 239,356.00 2,223.00 237,133.00 100,782.00 136,351.00
54,683
81,668.00
Sunday, September 25, 2005 345,446 66,682 174,848 85,553 672,529 1,216,767 1,889,296 103,348 315,035 418,383 105,237 523,620 879,377 486,299 1,365,676 1,889,296 TRUE
purchase inv.
No change if paid with cash. If paid on credit and CA/CL >1, it goes down. If paid on credit and CA/CL < 1, it goes up. No change if paid with cash. After Buy Inventory Decrease Cash CA (Pay cash $1, but it goes right back into 4 Inventory ($1) which is also a current asset) 2 CL 2 CA/CL= If paid on credit and CA/CL >1, it goes down. After Buy Inventory 4 CA (Inventory goes up by $1) 2 CL (AP goes up by $1 dollar) 2 CA/CL= If paid on credit and CA/CL < 1, it goes up. After Buy Inventory 5 CA (Inventory goes up by $1) 6 CL (AP goes up by $1 dollar) 0.833333333 CA/CL= If CA/CL >1, goes up. If CA/CL < 1, goes down. If supplier paid and CA/CL >1, goes up. After pay supplier 4 CA (Cash go down by $1) 2 CL (AP go down by $1) 2 CA/CL= If supplier paid and CA/CL < 1, goes down. Cash go down and AP go down 1 1
CA CL CA/CL=
Increase 1 1
Increase 1 1
After pay supplier 5 CA (Cash go down by $1) 6 CL (AP go down by $1) 0.833333333 CA/CL=
Page 23 of 100
If CA/CL >1, goes up. If CA/CL < 1, goes down. short term bank loan is paid If short term bank loan is paid and CA/CL >1, goes up. After CL loan is paid 4 CA (Cash go down by $1) 2 CL (CL loan go down by $1) 2 CA/CL= Cash go down and CL loan go down 1 1
If short term bank loan is paid and CA/CL <1, goes down. Before CL loan is paid After CL loan is paid CA 5 CA (Cash go down by $1) CL 6 CL (CL loan go down by $1) CA/CL= 0.833333333 CA/CL= d
If long-debt has not been classified as current liability, it will go down long-debt paid early If long-debt paid early, then it will CA/CL will go down. Before LTD loan is paid After LTD loan is paid Cash go down by $1 CA 4 CA (Cash go down by $1) CL 2 CL (CL stay the same) CA/CL= 2 CA/CL= ` No change AR is Paid AR is paid: Cash go up by $1 and AR go down by $1, both are in CA so no change. Before AR collected After AR collected CA 4 CA (Cash go up by $1, AR go down by $1) CL 2 CL (CL stay the same) CA/CL= 2 CA/CL= e No change Inv sold at cost If Inventory is sold at cost, Inv will go down by $1, but cash will go up by $1: both are CA, so no change. Before Inv sold at cost After Inv sold at cost CA 4 CA (Cash go up by $1, Inv by down by $1) CL 2 CL (CL stay the same) CA/CL= 2 CA/CL= f
Cash go up by $1 1
Cash go up by $1 1
Page 24 of 100
Inv sold at profit, CA/CL will go up. f Inv sold at profit If Inventory is sold at Profit, Inv will go down by $1, but cash will go up by $2: both are CA, so total CA go up. Before Inv sold at Profit After Inv sold at Profit Cash go up by $2 CA 4 CA (Cash go up by $2, Inv by down by $1) CL 2 CL (CL stay the same) CA/CL= 2 CA/CL=
Long Term Debt Issued To Pay Off Short Term Debt LTD traded for CL, CA/CL goes up. Take out LTD for $1 to pay off CL of $1. Before LTD issued After LTD issued CA 4 CA (No Change) CL 2 CL (CL down $1) CA/CL= 2 CA/CL= g
CL down $1 1
Page 25 of 100
Page 26 of 100
AR go down by $1 1
Inv go down by $1 1
Page 27 of 100
Inv go down by $1 1
Page 28 of 100
purchase inv.
No change if paid with cash. If paid on credit and CA/CL >1, it goes down. If paid on credit and CA/CL < 1, it goes up. No change if paid with cash. After Buy Inventory Decrease Cash CA (Pay cash $1, but it goes right back into 4 Inventory ($1) which is also a current asset) 2 CL 2 CA/CL= If paid on credit and CA/CL >1, it goes down. After Buy Inventory 4 CA (Inventory goes up by $1) 2 CL (AP goes up by $1 dollar) 2 CA/CL= If paid on credit and CA/CL < 1, it goes up. After Buy Inventory 5 CA (Inventory goes up by $1) 6 CL (AP goes up by $1 dollar) 0.833333333 CA/CL=
CA CL CA/CL=
4 2 2
Increase 5 3 1.666667 1 1
Increase 6 7 0.857143 1 1
If CA/CL >1, goes up. If CA/CL < 1, goes down. If supplier paid and CA/CL >1, goes up. After pay supplier 4 CA (Cash go down by $1) 2 CL (AP go down by $1) 2 CA/CL= If supplier paid and CA/CL < 1, goes down. Cash go down and AP go down 3 1 3 1 1
After pay supplier 5 CA (Cash go down by $1) 6 CL (AP go down by $1) 0.833333333 CA/CL=
Page 29 of 100
If CA/CL >1, goes up. If CA/CL < 1, goes down. short term bank loan is paid If short term bank loan is paid and CA/CL >1, goes up. After CL loan is paid 4 CA (Cash go down by $1) 2 CL (CL loan go down by $1) 2 CA/CL= Cash go down and CL loan go down 3 1 3 1 1
If short term bank loan is paid and CA/CL <1, goes down. Before CL loan is paid After CL loan is paid CA 5 CA (Cash go down by $1) CL 6 CL (CL loan go down by $1) CA/CL= 0.833333333 CA/CL= d
If long-debt has not been classified as current liability, it will go down long-debt paid early If long-debt paid early, then it will CA/CL will go down. Before LTD loan is paid After LTD loan is paid Cash go down by $1 CA 4 CA (Cash go down by $1) 3 CL 2 CL (CL stay the same) 2 CA/CL= 2 CA/CL= 1.5 ` No change AR is Paid AR is paid: Cash go up by $1 and AR go down by $1, both are in CA so no change. Before AR collected After AR collected CA 4 CA (Cash go up by $1, AR go down by $1) CL 2 CL (CL stay the same) CA/CL= 2 CA/CL= e f
Cash go up by $1 4 2 2 1
No change Inv sold at cost If Inventory is sold at cost, Inv will go down by $1, but cash will go up by $1: both are CA, so no change. Before Inv sold at cost After Inv sold at cost Cash go up by $1 CA 4 CA (Cash go up by $1, Inv by down by $1) 4 CL 2 CL (CL stay the same) 2 CA/CL= 2 CA/CL= 2
Page 30 of 100
Inv sold at profit, CA/CL will go up. f Inv sold at profit If Inventory is sold at Profit, Inv will go down by $1, but cash will go up by $2: both are CA, so total CA go up. Before Inv sold at Profit After Inv sold at Profit Cash go up by $2 CA 4 CA (Cash go up by $2, Inv by down by $1) 5 CL 2 CL (CL stay the same) 2 CA/CL= 2 CA/CL= 2.5
Long Term Debt Issued To Pay Off Short Term Debt LTD traded for CL, CA/CL goes up. Take out LTD for $1 to pay off CL of $1. Before LTD issued After LTD issued CA 4 CA (No Change) CL 2 CL (CL down $1) CA/CL= 2 CA/CL= g
CL down $1 4 1 4 1
Page 31 of 100
Page 32 of 100
AR go down by $1 1
Inv go down by $1 1
Page 33 of 100
Inv go down by $1 1
Page 34 of 100
PERIOD ENDING Net Sales COGS Selling General and Administrative Depreciation and Amortization Income from Continuing Operations Total Other Income/Expenses Net Earnings Before Interest And Taxes Interest Expense Income Before Tax Income Tax Expense Net Income Dividends Add To Retained Earnings
Wholefoods Market Income Statement ($000) Sunday, September 24, 2006 5,607,376.00 3,647,734.00 1,484,410.00 156,223.00 319,009.00 20,736.00 339,745.00 32.00 339,713.00 135,885.00 203,828.00 358,075 (154,247.00) Wholefoods Market Balance Sheet ($000) Sunday, September 24, 2006
PERIOD ENDING Assets Cash Account Receivable Inventory Other Total Current Assets Net Fixed Assets Total Assets Liabilities Accounts Payable Other Total Current Liabilities Long Term Debt Total Liabilities Stockholders' Equity Common stock and paid-in surplus Retained Earnings Total Stockholder Equity Total Stockholder Equity and Total Liabilities
256,164 82,137 203,727 81,953 623,981 1,419,015 2,042,996 121,857 387,913 509,770 129,083 638,853 1,054,883 349,260 1,404,143 2,042,996 TRUE
Sunday, September 25, 2005 4,701,289.00 3,052,184.00 1,285,613.00 133,759.00 229,733.00 9,623.00 239,356.00 2,223.00 237,133.00 100,782.00 136,351.00
54,683
Asset Turnover Inv Turnover Days holding Inv AR Turnover Days until collect AR AP Turnover Days until pay Operating Cycle in Days Cash Cycle in Days
Sales/Assets COGS/INV 365/Inv Turnover Sale/AR 365/AR Turnover COGS/AP 365/AP Turnover Days holding Inv+Days until collect AR Operating Cycle in Days - Days until pay
81,668.00
Sunday, September 25, 2005 345,446 66,682 174,848 85,553 672,529 1,216,767 1,889,296 103,348 315,035 418,383 105,237 523,620 879,377 486,299 1,365,676 1,889,296 TRUE
Note About Ratio Analysis For the B/S numbers: If you are looking forward (into future, like finance does), it may be best to use End Nu If you are looking backward (into past, like accounting aoften does), it may be best to
ay be best to use End Numbers does), it may be best to use (End + Beg)/2, an average amount.
PERIOD ENDING Net Sales COGS Selling General and Administrative Depreciation and Amortization Income from Continuing Operations Total Other Income/Expenses Net Earnings Before Interest And Taxes Interest Expense Income Before Tax Income Tax Expense Net Income Dividends Add To Retained Earnings
Wholefoods Market Income Statement ($000) Sunday, September 24, 2006 5,607,376.00 3,647,734.00 1,484,410.00 156,223.00 319,009.00 20,736.00 339,745.00 32.00 339,713.00 135,885.00 203,828.00 358,075 (154,247.00) Wholefoods Market Balance Sheet ($000) Sunday, September 24, 2006
PERIOD ENDING Assets Cash Account Receivable Inventory Other Total Current Assets Net Fixed Assets Total Assets Liabilities Accounts Payable Other Total Current Liabilities Long Term Debt Total Liabilities Stockholders' Equity Common stock and paid-in surplus Retained Earnings Total Stockholder Equity Total Stockholder Equity and Total Liabilities
256,164 82,137 203,727 81,953 623,981 1,419,015 2,042,996 121,857 387,913 509,770 129,083 638,853 1,054,883 349,260 1,404,143 2,042,996 TRUE
Sunday, September 25, 2005 4,701,289.00 3,052,184.00 1,285,613.00 133,759.00 229,733.00 9,623.00 239,356.00 2,223.00 237,133.00 100,782.00 136,351.00
54,683
Asset Turnover Inv Turnover Days holding Inv AR Turnover Days until collect AR AP Turnover Days until pay Operating Cycle in Days Cash Cycle in Days
Sales/Assets COGS/INV 365/Inv Turnover Sale/AR 365/AR Turnover COGS/AP 365/AP Turnover Days holding Inv+Days until collect AR Operating Cycle in Days - Days until pay
81,668.00
Sunday, September 25, 2005 345,446 66,682 174,848 85,553 672,529 1,216,767 1,889,296 103,348 315,035 418,383 105,237 523,620 879,377 486,299 1,365,676 1,889,296 TRUE
Note About Ratio Analysis For the B/S numbers: If you are looking forward (into future, like finance does), it may be best to use End Nu If you are looking backward (into past, like accounting aoften does), it may be best to
ay be best to use End Numbers does), it may be best to use (End + Beg)/2, an average amount.
PERIOD ENDING Net Sales COGS Selling General and Administrative Depreciation and Amortization Income from Continuing Operations Total Other Income/Expenses Net Earnings Before Interest And Taxes Interest Expense Income Before Tax Income Tax Expense Net Income Dividends Add To Retained Earnings
Wholefoods Market Income Statement ($000) Sunday, September 24, 2006 5,607,376.00 3,647,734.00 1,484,410.00 156,223.00 319,009.00 20,736.00 339,745.00 32.00 339,713.00 135,885.00 203,828.00 358,075 (154,247.00) Wholefoods Market Balance Sheet ($000) Sunday, September 24, 2006
PERIOD ENDING Assets Cash Account Receivable Inventory Other Total Current Assets Net Fixed Assets Total Assets Liabilities Accounts Payable Other Total Current Liabilities Long Term Debt Total Liabilities Stockholders' Equity Common stock and paid-in surplus Retained Earnings Total Stockholder Equity Total Stockholder Equity and Total Liabilities
256,164 82,137 203,727 81,953 623,981 1,419,015 2,042,996 121,857 387,913 509,770 129,083 638,853 1,054,883 349,260 1,404,143 2,042,996 TRUE
2006 Sunday, September 25, 2005 4,701,289.00 3,052,184.00 1,285,613.00 133,759.00 229,733.00 9,623.00 239,356.00 2,223.00 237,133.00 100,782.00 136,351.00
54,683
2005
Total Liability = TL = D Total Assets = TA = A Total Equity = TE = E EBIT Interest 2006 Debt Ratio TL/E = D/E Equity Multiplier Times Interest Earned Cash Coverage Ratio If you know this: D/A = Find these: A= D= E= D/E = A/E = A/E = 1 + D/E = D/A D/E A/E = 1 + D/E EBIT/Interest EBDIT/Interest
0.2
81,668.00
Sunday, September 25, 2005 345,446 66,682 174,848 85,553 672,529 1,216,767 1,889,296 103,348 315,035 418,383 105,237 523,620 879,377 486,299 1,365,676 1,889,296 TRUE
2005
PERIOD ENDING Net Sales COGS Selling General and Administrative Depreciation and Amortization Income from Continuing Operations Total Other Income/Expenses Net Earnings Before Interest And Taxes Interest Expense Income Before Tax Income Tax Expense Net Income Dividends Add To Retained Earnings
Wholefoods Market Income Statement ($000) Sunday, September 24, 2006 5,607,376.00 3,647,734.00 1,484,410.00 156,223.00 319,009.00 20,736.00 339,745.00 32.00 339,713.00 135,885.00 203,828.00 358,075 (154,247.00) Wholefoods Market Balance Sheet ($000) Sunday, September 24, 2006
PERIOD ENDING Assets Cash Account Receivable Inventory Other Total Current Assets Net Fixed Assets Total Assets Liabilities Accounts Payable Other Total Current Liabilities Long Term Debt Total Liabilities Stockholders' Equity Common stock and paid-in surplus Retained Earnings Total Stockholder Equity Total Stockholder Equity and Total Liabilities
256,164 82,137 203,727 81,953 623,981 1,419,015 2,042,996 121,857 387,913 509,770 129,083 638,853 1,054,883 349,260 1,404,143 2,042,996 TRUE
Sunday, September 25, 2005 4,701,289.00 3,052,184.00 1,285,613.00 133,759.00 229,733.00 9,623.00 239,356.00 2,223.00 237,133.00 100,782.00 136,351.00
54,683
Debt Ratio TL/E = D/E Equity Multiplier Times Interest Earned Cash Coverage Ratio If you know this: D/A = Find these: A= D= E= D/E = A/E = A/E = 1 + D/E =
81,668.00
Sunday, September 25, 2005 345,446 66,682 174,848 85,553 672,529 1,216,767 1,889,296 103,348 315,035 418,383 105,237 523,620 879,377 486,299 1,365,676 1,889,296 TRUE
2005
0.28 0.38 1.38 107.67 167.84
1.38
Total Stockholder Equity Total Liabilities Total Assets Net Sales Net Income Profit Margin = NI/Sales Return On Asset = NI/A Return On Equity = NI/E
ROE Product
ROA
ROE Product
1+D/E
ROE
ROE Product
Total Stockholder Equity Total Liabilities Total Assets Net Sales Net Income Profit Margin = NI/Sales Return On Asset = NI/A Return On Equity = NI/E
Profit Margin Asset TurnOver Equity Multiplier NI/Sales Sales/Asset Asset/Equity ROE Product 9/25/2005 0.029002897 2.488381387 1.383414514 0.099841397 9/24/2006 0.036349979 2.744682809 1.454977164 0.145161853 ROA Product ROA 9/25/2005 0.072170269 9/24/2006 0.099769163 ROA 9/25/2005 9/24/2006 ROE Product
ROE
PERIOD ENDING Net Sales COGS Selling General and Administrative Depreciation and Amortization Income from Continuing Operations Total Other Income/Expenses Net Earnings Before Interest And Taxes Interest Expense Income Before Tax Income Tax Expense Net Income Dividends Add To Retained Earnings
Wholefoods Market Income Statement ($000) Sunday, September 24, 2006 5,607,376.00 3,647,734.00 1,484,410.00 156,223.00 319,009.00 20,736.00 339,745.00 32.00 339,713.00 135,885.00 203,828.00 358,075 (154,247.00) Wholefoods Market Balance Sheet ($000) Sunday, September 24, 2006
PERIOD ENDING Assets Cash Account Receivable Inventory Other Total Current Assets Net Fixed Assets Total Assets Liabilities Accounts Payable Other Total Current Liabilities Long Term Debt Total Liabilities Stockholders' Equity Common stock and paid-in surplus Retained Earnings Total Stockholder Equity Total Stockholder Equity and Total Liabilities
256,164 82,137 203,727 81,953 623,981 1,419,015 2,042,996 121,857 387,913 509,770 129,083 638,853 1,054,883 349,260 1,404,143 2,042,996 TRUE
Sunday, September 25, 2005 4,701,289.00 3,052,184.00 1,285,613.00 133,759.00 229,733.00 9,623.00 239,356.00 2,223.00 237,133.00 100,782.00 136,351.00
54,683
ROA ROE b 2005 Internal Growth Rate Sustainable Growth Rate Shares outstanding on Sep 24, 2006 MV 1 share on Sep 24, 2006 EPS = Price-earnings ratio (Surrogate for Growth) Dividends per share = Market-to-Book Ratio
81,668.00
Sunday, September 25, 2005 345,446 66,682 174,848 85,553 672,529 1,216,767 1,889,296 103,348 315,035 418,383 105,237 523,620 879,377 486,299 1,365,676 1,889,296 TRUE
203,828.00 358,075 1,404,143 2006 NI/Assets NI/Equity (add to RE)/NI (ROA*b)/(1-ROA*b) (ROE*b)/(1-ROE*b) 139,607 $59.290 NI/Shares outstanding on Sep 24, 2006 = (MV per share)/EPS = Div/Shares outstanding (MV per share)/(Book value per share) 2005 0.072170 0.0998414 59.90%
Max company can grow with no external fina Max company can grow with no external fina
any can grow with no external financing any can grow with no external financing except to keep constant D/E ratio
PERIOD ENDING Net Sales COGS Selling General and Administrative Depreciation and Amortization Income from Continuing Operations Total Other Income/Expenses Net Earnings Before Interest And Taxes Interest Expense Income Before Tax Income Tax Expense Net Income Dividends Add To Retained Earnings
Wholefoods Market Income Statement ($000) Sunday, September 24, 2006 5,607,376.00 3,647,734.00 1,484,410.00 156,223.00 319,009.00 20,736.00 339,745.00 32.00 339,713.00 135,885.00 203,828.00 358,075 (154,247.00) Wholefoods Market Balance Sheet ($000) Sunday, September 24, 2006
PERIOD ENDING Assets Cash Account Receivable Inventory Other Total Current Assets Net Fixed Assets Total Assets Liabilities Accounts Payable Other Total Current Liabilities Long Term Debt Total Liabilities Stockholders' Equity Common stock and paid-in surplus Retained Earnings Total Stockholder Equity Total Stockholder Equity and Total Liabilities
256,164 82,137 203,727 81,953 623,981 1,419,015 2,042,996 121,857 387,913 509,770 129,083 638,853 1,054,883 349,260 1,404,143 2,042,996 TRUE
Sunday, September 25, 2005 4,701,289.00 3,052,184.00 1,285,613.00 133,759.00 229,733.00 9,623.00 239,356.00 2,223.00 237,133.00 100,782.00 136,351.00
54,683
ROA ROE b 2005 Internal Growth Rate Sustainable Growth Rate Shares outstanding on Sep 24, 2006 MV 1 share on Sep 24, 2006 EPS = Price-earnings ratio (Surrogate for Growth) Dividends per share = Market-to-Book Ratio
81,668.00
Sunday, September 25, 2005 345,446 66,682 174,848 85,553 672,529 1,216,767 1,889,296 103,348 315,035 418,383 105,237 523,620 879,377 486,299 1,365,676 1,889,296 TRUE
203,828.00 358,075 1,404,143 2006 NI/Assets NI/Equity (add to RE)/NI (ROA*b)/(1-ROA*b) (ROE*b)/(1-ROE*b) 139,607 $59.290 NI/Shares outstanding on Sep 24, 2006 = (MV per share)/EPS = Div/Shares outstanding (MV per share)/(Book value per share) 1.46 40.6092344 2.564878552 5.894911722 2005 0.072170 0.0998414 59.90% 4.52%
6.36%
Max company can grow with no external fina Max company can grow with no external fina
any can grow with no external financing any can grow with no external financing except to keep constant D/E ratio
Grocery Store Industry Statistics 2006 WholeFoods Price / Earnings: 17.5 40.6092344 Price / Book: 6 5.894911722 Net Profit Margin (mrq): 1.80% 3.63% Return on Equity: 13.10% 0.145161853 Total Debt / Equity: 1 0.454977164
Description up Sector: Services Industry: Grocery Stores (More Info) Companies Arden Group Inc. (ARDNA) Blue Square Israel Ltd. (BSI) Casey's General Stores Inc. (CASY) Delhaize Group (DEG) Diedrich Coffee Inc. (DDRX) Distribution y Servicio S.A. (DYS) Ingles Markets Inc. (IMKTA) Kroger Co. (KR) Pantry Inc. (PTRY) Pathmark Stores Inc. (PTMK) Publix Super Markets Inc. (PUSH.OB) Ruddick Corp. (RDK) Safeway Inc. (SWY) SUPERVALU Inc. (SVU) Susser Holdings Corporation (SUSS) The Great Atlantic & Pacific T (GAP) Village Super Market Inc. (VLGEA) Weis Markets Inc. (WMK) Whole Foods Market Inc. (WFMI) Winn-Dixie Stores Inc. (WINN)
Market Cap 3471.1B 72.0B 449.5M 601.2M 1.5B 9.5B 19.9M 3.4B 710.3M 19.6B 616.8M 672.9M NA 1.6B 14.5B 7.7B 349.1M 1.3B 339.8M 1.1B 7.0B 949.7M
P/E 28.08 17.5 17.27 11.68 19.67 19.37 NA 36.76 12.69 17.09 12.91 NA NA 21.09 16.86 14.78 942.73 NA 17.36 20.13 38.03 5.14
ROE %
Long-Term Debt to Equity 14.59 1.51 13.1 1.04 30.63 22.57 13.43 11.06 -15.81 NA 9.04 17.63 25.03 14.1 -23.77 23.5 NA 11.29 14.99 9.48 0.19 1.91 12.48 9.04 NA 13.11 108.9 0.01 1.2 0.39 0.8 0.87 1.63 1.34 3.24 6.11 0.4 0.97 1.65 0.72 0.57 0.17 0 0.03
P/E
Lowest Quartile Median Highest Quartile
Wholefoods
Net Profit Price to Book Margin % Value (mrq) -6.07 6.65 6.01 1.8 4.8 2.1 2.45 1.85 0.86 3.29 2.1 3.98 1.67 6.56 NA 2.25 2.33 1.36 2.1 2.32 2.08 1.78 4.87 1.19 Price to Book Value 1.78 2.1 3.29 5.894911722 5.42 2.21 2.33 1.69 -18.81 2.72 2.67 1.65 0.7 -1.88 5.42 2.3 2.22 1.11 0.91 -2.17 1.91 3.14 3.24 1.23 Net Profit Margin % (mrq) 1.14 2.06 2.7075 0.036349979
Question 1: Question 2: Wildhack Corp. Income Statement ($ in millions) For The Year Ended 2010 Sales COGS Depreciation EBIT Interest Paid Taxable income Taxes (34%) Net Income Dividends Addition to RE Dividends payout rate = PO = Addition to RE payout rate = b = $46 $86 34.85% 65.15% $3,756 2453 $490 $813 $613 $200 $68 $132 Wildhack Corp. Balance Sheet ($ in millions) As of December 31, 2009 and December 31, 2010 2009 2010 Current Ratio Quick Ratio Cash Ratio Inv Turnover Days holding Inv AR Turnover Days until collect AR AP Turnover Days until pay Operating Cycle in Days Cash Cycle in Days Debt Ratio D/E Ratio Equity Multiplier Times Interest Earned Cash Coverage Ratio Profit Margin Asset Turnover ROA Equity Multiplier 300 2356 $2,656 $5,996 300 2442 $2,742 $6,002 ROE ROA ROE b Wildhack Corp. Balance Sheet ($ in millions) As of December 31, 2009 and December 31, 2010 Internal Growth Rate Sustainable Growth Rate Assets/Equity Product CA/CL (CA-INV)/CL Cash/CL COGS/INV 365/Inv Turnover Sale/AR 365/AR Turnover COGS/AP 365/AP Turnover 365/Inv Turnover + 365/AR Turnover Operating Cycle in Days - 365/AP Turnover TL/TA D/E A/E = 1 + D/E EBIT/Interest EBDIT/Interest NI/Sales Sales/Assets Product
Assets
Current assets Cash Accounts receivable Inventory Total current assets Fixed assets Net plant and equipment Total assets $120 224 424 $768 5228 $5,996 $88 192 368 $648 5354 $6,002
Wildhack Corp. Income Statement ($ in millions) For The Year Ended 2010 Sales COGS Depreciation EBIT Interest Paid Taxable income Taxes (34%) Net Income Dividends Addition to RE
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Question 1: Standardized Net Income is the same as the Profit Margin Ra Question 2: The percentage of each dollar earned that goes to COGS is 6 Wildhack Corp. Income Statement ($ in millions) For The Year Ended 2010 Sales COGS Depreciation EBIT Interest Paid Taxable income Taxes (34%) Net Income Dividends Addition to RE Dividends payout rate = PO = Addition to RE payout rate = b = $46 $86 34.85% 65.15% $3,756 2453 $490 $813 $613 $200 $68 $132 W il B al A s
Wildhack Corp. Income Statement ($ in millions) For The Year Ended 2010 Sales COGS Depreciation EBIT Interest Paid Taxable income Taxes (34%) Net Income Dividends Addition to RE
100.0% 65.3% 13.0% 21.6% 16.3% 5.3% 1.8% 3.5% 1.2% 2.3%
W il B al A s
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Long-term debt Total liabilities Owners' equity Common stock and paid-in surplu Retained earnings Total owners' equity Total liabilities and owners' equity
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d Net Income is the same as the Profit Margin Ratio, NI/Sales. It tells us how much profit we make for every one dollar of sales we make. age of each dollar earned that goes to COGS is 65.3%. Wildhack Corp. Balance Sheet ($ in millions) As of December 31, 2009 and December 31, 2010 2009 2010 Current Ratio Quick Ratio Cash Ratio Inv Turnover Days holding Inv AR Turnover Days until collect AR AP Turnover Days until pay Operating Cycle in Days Cash Cycle in Days Debt Ratio D/E Ratio Equity Multiplier Times Interest Earned Cash Coverage Ratio Profit Margin Asset Turnover ROA Equity Multiplier 300 2356 $2,656 $5,996 300 2442 $2,742 $6,002 ROE ROA ROE b Wildhack Corp. Balance Sheet ($ in millions) As of December 31, 2009 and December 31, 2010 2009 2010 Internal Growth Rate Sustainable Growth Rate
Assets
Current assets Cash Accounts receivable Inventory Total current assets Fixed assets Net plant and equipment Total assets $120 224 424 $768 5228 $5,996 $88 192 368 $648 5354 $6,002
Assets
Current assets Cash Accounts receivable Inventory Total current assets Fixed assets Net plant and equipment Total assets 2.00% 1.47%
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CA/CL (CA-INV)/CL Cash/CL COGS/INV 365/Inv Turnover Sale/AR 365/AR Turnover COGS/AP 365/AP Turnover 365/Inv Turnover + 365/AR Turnover Operating Cycle in Days - 365/AP Turnover TL/TA D/E A/E = 1 + D/E EBIT/Interest EBDIT/Interest NI/Sales Sales/Assets Product Assets/Equity Product
0.5478 0.2367 0.0744 6.6658 54.7574 19.5625 18.6581 17.0347 21.4268 73.4156 56.3809 0.5432 1.1889 2.1889 1.3263 2.1256 0.03514377 0.6257914 0.02199267 2.1889132 0.04814004 0.02199267 0.04814004 65.15% 1.45% 3.24% days days days days
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231 77
1400 1200
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231 77
1400 1200
154
0.165 0.1925 0.666666667 12.36% 14.72%
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a b c d e f g
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purchase inv.
No change if paid with cash. If paid on credit and CA/CL >1, it goes down. If paid on credit and CA/CL < 1, it goes up. No change if paid with cash. After Buy Inventory Decrease Cash CA (Pay cash $1, but it goes right back into 4 Inventory ($1) which is also a current asset) 2 CL 2 CA/CL= If paid on credit and CA/CL >1, it goes down. After Buy Inventory 4 CA (Inventory goes up by $1) 2 CL (AP goes up by $1 dollar) 2 CA/CL= If paid on credit and CA/CL < 1, it goes up. After Buy Inventory 5 CA (Inventory goes up by $1) 6 CL (AP goes up by $1 dollar) 0.833333333 CA/CL=
CA CL CA/CL=
4 2 2
Increase 5 3 1.666667 1 1
Increase 6 7 0.857143 1 1
If CA/CL >1, goes up. If CA/CL < 1, goes down. If supplier paid and CA/CL >1, goes up. After pay supplier 4 CA (Cash go down by $1) 2 CL (AP go down by $1) 2 CA/CL= If supplier paid and CA/CL < 1, goes down. Cash go down and AP go down 3 1 3 1 1
After pay supplier 5 CA (Cash go down by $1) 6 CL (AP go down by $1) 0.833333333 CA/CL=
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If CA/CL >1, goes up. If CA/CL < 1, goes down. short term bank loan is paid If short term bank loan is paid and CA/CL >1, goes up. After CL loan is paid 4 CA (Cash go down by $1) 2 CL (CL loan go down by $1) 2 CA/CL= Cash go down and CL loan go down 3 1 3 1 1
If short term bank loan is paid and CA/CL <1, goes down. Before CL loan is paid After CL loan is paid CA 5 CA (Cash go down by $1) CL 6 CL (CL loan go down by $1) CA/CL= 0.833333333 CA/CL= d
If long-debt has not been classified as current liability, it will go down long-debt paid early If long-debt paid early, then it will CA/CL will go down. Before LTD loan is paid After LTD loan is paid Cash go down by $1 CA 4 CA (Cash go down by $1) 3 CL 2 CL (CL stay the same) 2 CA/CL= 2 CA/CL= 1.5 ` No change AR is Paid AR is paid: Cash go up by $1 and AR go down by $1, both are in CA so no change. Before AR collected After AR collected CA 4 CA (Cash go up by $1, AR go down by $1) CL 2 CL (CL stay the same) CA/CL= 2 CA/CL= e No change Inv sold at cost If Inventory is sold at cost, Inv will go down by $1, but cash will go up by $1: both are CA, so no change. Before Inv sold at cost After Inv sold at cost CA 4 CA (Cash go up by $1, Inv by down by $1) CL 2 CL (CL stay the same) CA/CL= 2 CA/CL= f
Cash go up by $1 4 2 2 1
Cash go up by $1 4 2 2 1
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Inv sold at profit, CA/CL will go up. f Inv sold at profit If Inventory is sold at Profit, Inv will go down by $1, but cash will go up by $2: both are CA, so total CA go up. Before Inv sold at Profit After Inv sold at Profit Cash go up by $2 CA 4 CA (Cash go up by $2, Inv by down by $1) 5 CL 2 CL (CL stay the same) 2 CA/CL= 2 CA/CL= 2.5
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AR go down by $1 1
Inv go down by $1 1
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Inv go down by $1 1
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#9 COGS = AP = Days to pay of AP = What does a large value imply? #33 Net Loss Sales Progit Margin = Does the currency type make a difference? Net Income Sales Progit Margin =
$317,628.00 -0.082381276
#9 COGS = AP = Days to pay of AP = 41682 8917 78.08418502 It implies that they are having a hard time paying bills - probably because they are having a cash shortage problem. It could also mean that they have really large terms from their suppliers (unlikely, though). #33 Net Loss Sales Progit Margin = Does the currency type make a difference? Net Income Sales Progit Margin = -14,537.00 176,460.00 -0.082381276 No, because when you do the division, the units cancel out. -$26,166.60 $317,628.00 -0.082381276
days
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0.0680
$8,500.00 0.0680
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Smolira Golf Corp. Income Statement ($ in millions) For The Year Ended 2006 Sales COGS Depreciation EBIT Interest Paid Taxable income Taxes (34%) Net Income Dividends Addition to RE Dividends payout rate = PO = Addition to RE payout rate = b =
Smolira Golf Corp. Income Statement ($ in millions) For The Year Ended 2006 Sales COGS Depreciation EBIT Interest Paid Taxable income Taxes (34%) Net Income Dividends Addition to RE Dividends payout rate = PO = Addition to RE payout rate = b = 5.49% 13.66% 28.66% 71.34% 100.00% 64.95% 3.68% 31.37% 2.36% 29.01% 9.86% 19.15% Smolira Golf Corp. Balance Sheet ($ in As of December
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Smolira Golf Corp. Balance Sheet ($ in millions) As of December 31, 2005 and December 31, 2006 2005 2006
Assets
Current assets Cash Accounts receivable Inventory Total current assets Fixed assets Net plant and equipment Total assets $2,612 3,108 9,840 $15,560 29,650 $45,210 $2,783 3,780 10,970 $17,533 41,323 $58,856
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Smolira Golf Corp. Balance Sheet ($ in millions) As of December 31, 2005 and December 31, 2006 2005 2006
Assets
Current assets Cash Accounts receivable Inventory Total current assets Fixed assets Net plant and equipment Total assets 5.78% 6.87% 21.77% 34.42% 65.58% 100.00% 4.73% 6.42% 18.64% 29.79% 70.21% 100.00%
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Current Ratio Quick Ratio Cash Ratio Asset Turnover Inv Turnover Days holding Inv AR Turnover Days until collect AR AP Turnover Days until pay Operating Cycle in Days Cash Cycle in Days Debt Ratio D/E Ratio Equity Multiplier Times Interest Earned Cash Coverage Ratio Profit Margin Asset Turnover ROA Equity Multiplier ROE ROA ROE b Internal Growth Rate Sustainable Growth Rate
CA/CL (CA-INV)/CL Cash/CL Sales/Assets COGS/INV 365/Inv Turnover Sale/AR 365/AR Turnover COGS/AP 365/AP Turnover 365/Inv Turnover + 365/AR Turnover Operating Cycle in Days - 365/AP Turnover TL/TA D/E A/E = 1 + D/E EBIT/Interest EBDIT/Interest
2006 4.61 1.72 0.73 1.49 5.18 70.47 23.14 15.77 25.95 14.07 86.24 72.17
0.30 0.43 1.43 13.30 14.85 2006 19.15% 1.49 28.46% 1.43 40.65% 28.46% 40.65% 71.34% 25.48% 40.84% 2006
2005 Shares outstanding MV 1 share end 2006 EPS = Price-earnings ratio NI/Shares outstanding = (MV per share)/EPS = Dividends per share = (MV per share)/(Book value per share) 10,000 $24
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Smolira Golf Corp. Income Statement ($ in millions) For The Year Ended 2006 Sales COGS Depreciation EBIT Interest Paid Taxable income Taxes (34%) Net Income Dividends Addition to RE Dividends payout rate = PO = Addition to RE payout rate = b =
Smolira Golf Corp. Income Statement ($ in millions) For The Year Ended 2006 Sales COGS Depreciation EBIT Interest Paid Taxable income Taxes (34%) Net Income Dividends Addition to RE Dividends payout rate = PO = Addition to RE payout rate = b = 5.49% 13.66% 28.66% 71.34% 100.00% 64.95% 3.68% 31.37% 2.36% 29.01% 9.86% 19.15% Smolira Golf Corp. Balance Sheet ($ in As of December
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Smolira Golf Corp. Balance Sheet ($ in millions) As of December 31, 2005 and December 31, 2006 2005 2006
Assets
Current assets Cash Accounts receivable Inventory Total current assets Fixed assets Net plant and equipment Total assets $2,612 3,108 9,840 $15,560 29,650 $45,210 $2,783 3,780 10,970 $17,533 41,323 $58,856
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Smolira Golf Corp. Balance Sheet ($ in millions) As of December 31, 2005 and December 31, 2006 2005 2006
Assets
Current assets Cash Accounts receivable Inventory Total current assets Fixed assets Net plant and equipment Total assets 5.78% 6.87% 21.77% 34.42% 65.58% 100.00% 4.73% 6.42% 18.64% 29.79% 70.21% 100.00%
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Current Ratio Quick Ratio Cash Ratio Asset Turnover Inv Turnover Days holding Inv AR Turnover Days until collect AR AP Turnover Days until pay Operating Cycle in Days Cash Cycle in Days Debt Ratio D/E Ratio Equity Multiplier Times Interest Earned Cash Coverage Ratio Profit Margin Asset Turnover ROA Equity Multiplier ROE ROA ROE b Internal Growth Rate Sustainable Growth Rate Shares outstanding MV 1 share end 2006 EPS = Price-earnings ratio
CA/CL (CA-INV)/CL Cash/CL Sales/Assets COGS/INV 365/Inv Turnover Sale/AR 365/AR Turnover COGS/AP 365/AP Turnover 365/Inv Turnover + 365/AR Turnover Operating Cycle in Days - 365/AP Turnover TL/TA D/E A/E = 1 + D/E EBIT/Interest EBDIT/Interest NI/Sales Sales/Assets Assets/Equity
2006 4.61 1.72 0.73 1.49 5.18 70.47 23.14 15.77 25.95 14.07 86.24 72.17
13.30 14.85 2005 2006 19.15% 1.49 Product 28.46% 1.43 Product 40.65% 28.46% 40.65% 71.34% 25.48% 40.84% 2005 2006 10,000 $24
NI/Shares outstanding = (MV per share)/EPS = Dividends per share = (MV per share)/(Book value per share)
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Homework chapter 3 PR 37
Dispersion of Industry numbers Lowest Quartile Median Highest Quartile Smolira 2006 Ratios Current Ratio 1.2 2.4 4.7 Asset Turnover 1.5 2.6 3.8 D/E 0.25 0.4 0.6 Profit Margin 8.4% 11.9% 16.3%
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Homework chapter 3 PR 37
olf performance
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Smolira Golf is well above average when it comes to the current ratio. Their current ration is Perhaps Smolira Golf is 1) building up working capital to acquire some profitable assets, or pe assets that could become obsolete or 3) they have extra cash that is potentially not earning a long term assets could. In addition, suppliers and bankers could view this as a sign tha Their asset turn over is in the lowest quartile. Compared to their industry they are generating each asset than others in the industry. In comparison, they are not using the assets efficien bought new assets that have not been depreciated much and thus the rati Their debt to equity ratio has gone down a small bit over the year. In comparison to the indust when it comes to debt. Smolira is well leveraged in line with the indus
Smolira's profit margin is in the highest quartile. The ratio of Expenses to sales is amazing. P at managing expenses, or perhaps they have 2) a superior product that can capture a high p obfuscating accounting tricks! On the downside, it could be that they are charging too much, a a high profit margin, it would almost certainly mean that Net Income is lower than it would b
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olf performance
to the current ratio. Their current ration is near the highest orking capital to acquire some profitable assets, or perhaps obsolete or 3) they have extra cash that is potentially not assets could. In addition, suppliers and bankers could view hat they could pay bills. mpared to their industry they are generating fewer dollars in In comparison, they are not using the assets efficiently. Or ve not been depreciated much and thus the ratio is low. it over the year. In comparison to the industry they are near molira is well leveraged in line with the industry. he ratio of Expenses to sales is amazing. Perhaps they are ey have 2) a superior product that can capture a high price, ks! On the downside, it could be that they are charging too margin, it would almost certainly mean that Net Income is d be at a lower profit margin.
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Assets
Current assets Cash Accounts receivable Inventory Total current assets Fixed assets Net plant and equipment Total assets $19,250 46,381 109,831 $175,462 612,832 $788,294 $21,386 49,327 119,834 $190,547 702,683 $893,230
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Assets
Current assets Cash Accounts receivable Inventory Total current assets Fixed assets Net plant and equipment Total assets
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Assets
Current assets Cash Accounts receivable Inventory Total current assets Fixed assets Net plant and equipment Total assets $19,250 46,381 109,831 $175,462 612,832 $788,294 $21,386 49,327 119,834 $190,547 702,683 $893,230
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Assets
Current assets Cash Accounts receivable Inventory Total current assets Fixed assets Net plant and equipment Total assets 2.44% 5.88% 13.93% 22.26% 77.74% 100.00% 2.39% 5.52% 13.42% 21.33% 78.67% 100.00%
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Current Ratio Quick Ratio Cash Ratio Debt Ratio D/E Ratio Equity Multiplier Profit Margin Asset Turnover