2-7 Financial Statement Analysis

2-7 Financial Statement Analysis

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Unformatted text preview: ing Info. (cont’d)Using Profitability Ratios Profitability = Operating Success ­ Return on Sales ­ Earnings Per Share Net Income Net Income Net Sales # Common Shares ­ Return on Equity Net Income Owner’s Equity Using Acc’ting Info. (Con’td)Using Activity Ratios ­ Inventory Turnover ­ A/R Turnover Cost of Goods Sold Net Acc’ts Receivable Avg. Inventory Net Daily Credit Sales Current Ratio- Walmart Current $59,940 $71,818 = 0.835 Quick (Acid-Test) Ratio Quick $14,549 $71,818 = 0.20 Debt to Equity Ratio Debt $121,367 = $81,738 1.485 Profitability Ratios Profitability Return on Sales $ 16,999 = 3.65% $466,114 Return on Equity $ 16,999 = 20.8% $ 81,738 Earnings per Share $ 16,999 = $5.02 3,389 Activity Ratios Activity Inventory Turnover $352,488 = 8.05 $43,803 What would be the “ideal” value of the current ratio? current a) As low as possible b) Less than one c) One d) More than one e) As high as possible What would be the ideal value of the quick ratio? ratio? a) As low as possible b) Less than one c) One d) More than one e) As high as possible The debt equity ratio should be The a) As low as possible b) Less than one c) One d) More than one e) As high as possible Comparison: WalMart and Target Comparison: Wal-Mart Wal-Mart Target Wal-Mart Wal-Mart Target (20...
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This document was uploaded on 03/18/2014 for the course AEM 1200 at Cornell University (Engineering School).

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