All ratios should use year-end totals and not averages and be compared to its in
ID: 1171862 • Letter: A
Question
All ratios should use year-end totals and not averages and be compared to its industry average as well as time trend analysis. Calculate the ratios mentioned in the table below. For the turnover in days, assume 365 days. Also the debt ratio industry average given in the case is actually the liabilities-to-asset ratio. Hint: for Cash flow statement, you have to add back amortization to the Land, Plant, and Equipment item.
Ratios:
Current Ratio
Fixed Assets Turnover
Operating Profit Margin
Parts Inventory Turnover in Days
Total Assets Turnover
Net Profit Margin
WIP Inventory Turnover in Days
Liabilities-to-asset ratio
Return on Assets
FG Inventory Turnover in Days
Times Interest Earned
Return on Equity
A/R Turnover in Days
Gross Profit Margin
Income Statement
2005 2006 2007 2008 2009
Sales
2,142,659,000
5,413,625,000
8,671,715,000
12,175,476,500
13,664,714,160
Cost of Goods Sold
1,323,957,000
3,120,000,500
5,032,513,200
7,886,796,000
8,974,149,576
Gross Profit
818,702,000
2,293,624,500
3,639,201,800
4,288,680,500
4,690,564,584
Operating Costs
Selling and Distribution
212,340,640
545,980,400
854,300,000
934,532,230
1,001,234,530
R&D
93,640,450
220,340,340
365,660,340
476,350,230
785,774,340
Administration
95,003,300
405,340,300
832,740,300
999,453,230
980,340,500
Amortization
81,414,429
122,465,588
187,929,165
288,216,088
394,440,051
Operating Profit
336,303,182
999,497,873
1,398,571,995
1,590,128,722
1,528,775,163
Interest
53,251,456
145,434,234
288,898,584
277,686,944
329,923,700
Earnings Before Taxes
283,051,726
854,063,638
1,109,673,411
1,312,441,778
1,198,851,462
Taxes
99,068,104
298,922,273
388,385,694
459,354,622
419,598,012
Net Income
183,983,622
555,141,365
721,287,717
853,087,156
779,253,450
BALANCE SHEETS
2005
2006
2007
2008
2009
Cash
310,630,300
790,419,373
1,437,227,573
1,366,526,361
1,413,474,400
A/R
316,972,950
758,988,750
1,201,094,250
1,328,523,975
1,503,560,340
Parts Inventory
253,578,360
607,191,000
960,875,400
1,062,819,180
1,201,345,530
WIP Inventory
26,789,180
45,354,460
66,650,675
75,640,210
89,575,400
Finished Goods Inventory
359,340,630
960,187,250
1,451,230,215
1,605,660,505
1,805,340,520
Total Current Assets
1,267,311,420
3,162,140,833
5,117,078,113
5,439,170,231
6,013,296,190
L,P,&E, Net
710,727,625
812,956,891
1,317,388,220
2,281,077,095
3,363,891,508
Intangibles
103,416,660
411,698,984
561,903,428
601,083,781
580,509,006
Total Assets
2,081,455,705
4,386,796,708
6,996,369,761
8,321,331,107
9,957,696,704
A/P
422,630,600
1,011,985,000
1,305,530,320
1,509,430,300
1,564,430,450
Current Portion of LT Debt
147,920,710
341,394,916
607,184,919
651,847,287
785,532,620
Total Current Liabilities
570,551,310
1,353,379,916
1,912,715,239
2,161,277,587
2,349,963,070
Long-term Debt
739,603,550
1,706,974,582
3,035,924,595
3,259,236,437
3,927,663,101
Shareholders’ Equity
771,300,845
1,326,442,210
2,047,729,927
2,900,817,082
3,680,070,533
Total Liabilities and Equities
2,081,455,705
4,386,796,708
6,996,369,761
8,321,331,107
9,957,696,704
SALES ANALYSIS
2005
2006
2007
2008
2009
TV-LCD
Unit Price
$ 1,640
$ 1,485
$ 1,425
$ 1,250
$ 1,070
Unit Cost
$ 950
$ 835
$ 819
$ 810
$ 702
Quantity
250,000
2,620,000
4,889,600
8,560,300
11,230,388
TV-Plasma
Unit Price
$ 1,340
$ 1,100
$ 1,000
-
-
Unit Cost
$ 850
$ 700
$ 646
-
-
Quantity
1,080,000
830,000
530,400
-
-
DVD-HD
Unit Price
$ 250
$ 240
$ 225
$ 180
$ 140
Unit Cost
$ 145
$ 134
$ 125
$ 120
$ 112
Quantity
240,000
1,400,000
2,010,000
1,400,000
350,000
DVD-Blue Ray
Unit Price
-
-
$ 275
$ 220
$ 185
Unit Cost
-
-
$ 175
$ 161
$ 138
Quantity
-
-
330,000
1,580,000
2,890,000
Cable Sets
Unit Price
$ 105
$ 100
$ 100
$ 95
$ 95
Unit Cost
$ 45
$ 45
$ 43
$ 40
$ 41
Quantity
245,600
399,400
854,300
1,298,700
1,654,200
Home Theatre
Unit Price
$ 570
$ 570
$ 570
$ 550
$ 520
Unit Cost
$ 350
$ 355
$ 355
$ 350
$ 335
Quantity
350,300
410,500
956,500
1,367,500
1,745,000
Current Ratio
Fixed Assets Turnover
Operating Profit Margin
Parts Inventory Turnover in Days
Total Assets Turnover
Net Profit Margin
WIP Inventory Turnover in Days
Liabilities-to-asset ratio
Return on Assets
FG Inventory Turnover in Days
Times Interest Earned
Return on Equity
A/R Turnover in Days
Gross Profit Margin
Explanation / Answer
Ratio Calculation 2005 2006 2007 2008 2009 Current Ratio Current Assets/Current Liabilities 2.22 2.34 2.68 2.52 2.56 Fixed Assets Turnover Sales/Fixed Assets 3.01 6.66 6.58 5.34 4.06 Operating Profit Margin Operating Profit/Sales 15.70% 18.46% 16.13% 13.06% 11.19% Parts Inventory Turnover(days) 365/(Sales/Parts Inventory) 43.20 40.94 40.44 31.86 32.09 Total Assets Turnover Sales/Total Assets 1.03 1.23 1.24 1.46 1.37 Net Profit Margin Net Profit/Sales 8.59% 10.25% 8.32% 7.01% 5.70% WIP Inventory Turnover in Days 365/(Sales/WIP Inventory) 4.56 3.06 2.81 2.27 2.39 Liabilities-to-assets ratio (Current Liabilities+Long-Term Debt)/Total Assets 0.63 0.70 0.71 0.65 0.63 Return on Assets Net income/Total Assets 8.84% 12.65% 10.31% 10.25% 7.83% FG Inventory Turnover in Days 365/(Sales/Finished Goods Inventory) 61.21 64.74 61.08 48.13 48.22 Times Interest Earned (Earnings before Taxes+Interest)/Interest 6.32 6.87 4.84 5.73 4.63 Return on Equity Net Income/Shareholder's Equity 23.85% 41.85% 35.22% 29.41% 21.17% A/R Turnover in Days 365/(Sales/ A/R ) 54 51.17 50.56 39.83 40.16 Gross Profit Margin Gross Profit/Sales 38.21% 42.37% 41.97% 35.22% 34.33%