QUESTIONS- Identify four ratios that measure how effectively a firm is managing its assets and write out their equations. what out their equations.
What problem might arise when comparing firm's fixed assets turnover ratios?
A firm has 200 million annual sales, 180 million costs of goods sold $40 million of inventory, and 60 million of accounts receivable. What is its inventory turnover ratio? (4.5) what is its DSO based on a 365-day year? (109.5 days)
QUESTION- How does the used of financial leverage affect current stockholder's control position?
Name six ratios that are used to measure the extent to which a firm uses financial leverage and write out their equations.
E company has EBITDA of $600 million, interest payment of $60 million, lease payments of $40 million, and required principal payments (due this year) of $30 million. What is its EBITDA coverage ratio?(4.9)
QUESTION- DATE FOR LOZANO SHIP COMPANY IT IS INDUSTRY AVERAGE FALLOW.
COMPREHENSIVE RATIO ANALYSIS
Calculate the indicated ratios Lozano.
Construct the extended Du Pont equation for both Lozano and the industry.
Ouline Lozanos Strengths and weakness as reavealed by yours analysis.
Lozano Chip Company: Balance Sheet as December 31, 2013 (Thousands of dollars)
Cash $ 225,000 Account payable $601,866
Receivables 1,575,000 Notes payable $326,634
Inventories ___1,125,000__ Other current Liabilities ___525,000_
Total current assets $2,950.000 Total current liabilities $1,453,500
Net fixed assets 1,350,000 Long-term debt 1,752,750
__________________ ___________________
Total assets $ 4,275.000 Total liabilities and equity $ 4,275,000
Lozano Chip Company: income Statement for the year ended December 31, 2013
(thousands of dollars)
Sales $ 7,500.000
Cost of goods sold 6,375,000
Selling, general, and administrative expenses 8, 25,000
________________
Earnings before interest and taxes (EBIT) $ 300,000
Interest expense 111,631
_________________
Earnings before taxes (EBIT) $ 188.369
Federal and state income taxes (40%) 75,348
________________
Net income 113,022
RATIO LOZANO INDUSTRY AVERAGE
Currants assets/current _____________________ 2.0
Days sales outstanding (365-day year)________________ 35.0 days
COGS/Inventory __________________ 6.7
Sales/fixed assets __________________ 12.1
Sales/ Total assets ____________________ 3.0
Net Income/assets ______________________ 1.2%
Net income/Total assets ________________________ 3.6%
Net income/Common equity ________________________ 9.0%
Total debit/Total assets ________________________ 30.0%
Total Liabilities/Total assets ________________________ 60.0%