in international finance to compare the business operations of firms andor

In international finance to compare the business

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in international finance to compare the business operations of firms and/or divisions across nationaleconomic borders. The net income in dollars is:Net income = Profit margin × SalesNet income = –.1362($327,810) Net income = –$44,65226.Short-term solvency ratios:Current ratio = Current assets / Current liabilitiesCurrent ratio 2014= $68,074 / $61,722 = 1.10 timesCurrent ratio 2015= $79,974 / $69,426 = 1.15 timesQuick ratio = (Current assets – Inventory) / Current liabilitiesQuick ratio 2014= ($68,074 – 27,931) / $61,722 = .65 timesQuick ratio 2015= ($79,974 – 32,586) / $69,426 = .68 timesCash ratio = Cash / Current liabilitiesCash ratio 2014= $26,450 / $61,722 = .43 timesCash ratio 2015 = $29,106 / $69,426 = .42 timesAsset utilization ratios:Total asset turnover = Sales / Total assetsTotal asset turnover= $422,045 / $478,319 = .88 timesInventory turnover= Cost of goods sold / InventoryInventory turnover = $291,090 / $32,586 = 8.93 times
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Receivables turnover= Sales / Accounts receivableReceivables turnover = $422,045 / $18,282 = 23.09 timesLong-term solvency ratios:Total debt ratio = (Total assets – Total equity) / Total assetsTotal debt ratio 2014= ($425,239 – 268,517) / $425,239 = .37 timesTotal debt ratio 2015= ($478,319 – 298,893) / $478,319 = .38 timesDebt-equity ratio = Total debt / Total equityDebt-equity ratio 2014= ($61,722 + 95,000) / $268,517 = .58 timesDebt-equity ratio 2015= ($69,426 + 110,000) / $298,893 = .60 timesEquity multiplier = 1 + D/EEquity multiplier 2014 = 1 + .58 = 1.58 timesEquity multiplier 2015 = 1 + .60 = 1.60 timesTimes interest earned= EBIT / InterestTimes interest earned= $93,902 / $16,400 = 5.73 timesCash coverage ratio= (EBIT + Depreciation) / InterestCash coverage ratio = ($93,902 + 37,053) / $16,400 = 7.99 timesProfitability ratios:Profit margin= Net income / SalesProfit margin= $50,376 / $422,045 = .1194, or 11.94%Return on assets= Net income / Total assetsReturn on assets= $50,376 / $478,319 = .1053, or 10.53%Return on equity= Net income / Total equityReturn on equity= $50,376 / $298,893 = .1685, or 16.85%27.The DuPont identity is:ROE = (PM)(TAT)(EM) ROE = (.1194)(.88)(1.60) = .1685, or 16.85%
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28.SMOLIRA GOLF CORP.Statement of Cash FlowsFor 2015Cash, beginning of the year$ 26,450 Operating activitiesNet income$ 50,376 Plus:Depreciation$ 37,053 Increase in accounts payable4,883 Increase in other current liabilities5,161 Less:Increase in accounts receivable$ (4,589)Increase in inventory(4,655)Net cash from operating activities$ 88,229 Investment activitiesFixed asset acquisition$(78,233)Net cash from investment activities$(78,233)Financing activitiesIncrease in notes payable$ (2,340) Dividends paid(20,000)Increase in long-term debt15,000 Net cash from financing activities$(7,340)Net increase in cash$ 2,656Cash, end of year$ 29,106 29.Earnings per share = Net income / SharesEarnings per share= $50,376 / 25,000 = $2.02 per shareP/E ratio= Share price / Earnings per shareP/E ratio = $58 / $2.02 = 28.78 timesDividends per share= Dividends / SharesDividends per share= $20,000 / 25,000 = $.80 per shareBook value per share= Total equity / SharesBook value per share= $298,893 / 25,000 shares = $11.96 per share
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Market-to-book ratio= Share price / Book value per shareMarket-to-book ratio = $58 / $11.96 = 4.85 timesPEG ratio= P/E ratio / Growth ratePEG ratio = 28.78 / 9 = 3.20 times30.First, we will find the market value of the company’s equity, which is:Market value of equity = Shares × Share priceMarket value of equity = 25,000($58) = $1,450,000The total book value of the company’s debt is:Total debt = Current liabilities + Long-term debtTotal debt = $69,426 + 110,000 = $179,426Now we can calculate Tobin’s Q, which is:Tobin’s Q = (Market value of equity + Book value of debt) / Book value of assetsTobin’s Q = ($1,450,000 + 179,426) / $478,319Tobin’s Q = 3.41
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  • Spring '17
  • MelvinStith
  • Corporate Finance, Ratio, Net Income, Financial Ratio, TA

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