Based on the financial information provided-calculate the


Title: Calculating and Analyzing Ratios

Based on the financial information provided, calculate the following ratios and explain their purpose:

Current Ratio Inventory Turnover Ratio Accounts Receivable Turnover Ratio Debt to Equity Ratio Return on Assets Ratio Asset Turnover Ratio Return on Equity Ratio Profit Margin Ratio Price-Earnings Ratio Dividend Yield Ratio Note: When a balance sheet amount is related to an income statement amount in computing a ratio, the balance sheet amount should be an average of that period. The average is calculated by adding the ending balances of this year and last year and dividing the result by 2. Describe how a bank lending officer might use ratio analysis. Select five ratios that would be most useful for the purpose and explain the rationale for your selection.


12/31/10

12/31/09


Amount in Dollars

Amount in Dollars

Cash

200.00

150.00

Receivables

500.00

350.00

Inventories

750.00

755.00

Other Current Assets

100.00

75.00

Total Current Assets

1,550.00

1,330.00

Plant and Equipment

1,100.00

1,170.00

Other Long - Term Assets

150.00

100.00

Total Assets

2,800.00

2,600.00

Accounts Payable

510.00

400.00

Other Current Liabilities

25.00

25.00

Total Current Liabilities

535.00

425.00

Long Term Debt

375.00

400.00

Other Long Term Liabilities

225.00

175.00

Preferred Stock

250.00

250.00

Shareholders' Equity

1,415.00

1,350.00

Total Liabilities and Shareholders' Equity

2,800.00

2,600.00

 

 

Year-2010

Year-2009



Amount in Dollars


Net Sales

3500.00

3200.00


Cost of Goods Sold

2200.00

2100.00


Other Expenses

300.00

250.00


Depreciation

77.00

62.00


Interest Expenses

40.00

46.00


Tax

200.00

150.00


Net Income

683.00

592.00


Preferred Stock Dividend

25.00



Common Stock Dividends

260.00


Market Value of Equity

4000.00


Average Number of Shares

100.00


Share Price

40.00


Dividends per Share

2.60


Earnings per Share

6.58


 

 

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Financial Accounting: Based on the financial information provided-calculate the
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