35 times nwc to total assets nwc ta 2256 301 1995

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Unformatted text preview: 56 – 1,995) / 5,394 = .05 Interval Measure = CA / average daily Interval operating costs operating 2,256 / ((2,006 + 1,740)/365) = 219.8 days 12 12 Computing Long-term Solvency Computing Ratios Ratios Total Debt Ratio = (TA – TE) / TA Debt/Equity = TD / TE (5,394 – 2,556) / 2,556 = 1.11 times Equity Multiplier = TA / TE = 1 + D/E (5,394 – 2,556) / 5,394 = 52.61% 1 + 1.11 = 2.11 Long-term debt ratio = LTD / (LTD + TE) 843 / (843 + 2,556) = 24.80% 13 13 Computing Coverage Ratios Times Interest Earned = EBIT / Interest 1,138 / 7 = 162.57 times Cash Coverage = (EBIT + Depreciation) / Cash Interest Interest (1,138 + 116) / 7 = 179.14 times 14 14 Computing Inventory Ratios Inventory Turnover = Cost of Goods Sold / Inventory Inventory Inventory 2,006 / 301 = 6.66 times Days’ Sales in Inventory = 365 / Inventory Days’ Turnover Turnover 365 / 6.66 = 55 days 15 15 Computing Receivables Ratios Receivables Turnover = Sales / Accounts Receivables Receivable Receivable 5,000 / 956 = 5.23 times Days’ Sales in Receivables = 365 / Days’ Receivables Turnover Receivables 365 / 5.23 = 70 days 16 16 Computing Total Asset Turnover Total Asset Turnover = Sales / Total Assets NWC Turnover = Sales / NWC 5,000 / 5,394 = .93 It is not unusual for TAT < 1, especially if a firm has a It large amount of fixed assets large 5,000 / (2,256 – 1,995) = 19.16 times Fixed Asset Turnover = Sales / NFA 5,000 / 3,138 = 1.59 times 17 17 Computing Profitability Computing Measures Measures Profit Margin = Net Income / Sales 689 / 5,000 = 13.78% Return on Assets (ROA) = Net Income / Return Total Assets Total 689 / 5,394 = 12.77% Return on Equity (ROE) = Net Income / Return Total Equity Total 689 / 2,556 = 26.96% 18 18 Comp...
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This document was uploaded on 04/02/2014.

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