Ratio Analysis Memo for Riordan Manufacturing, Inc. By Teri N. Owens University of Phoenix XACC/291 STEVEN GERMAN November 23, 2014 * Liquidity ratios 1. Current ratio $14,524,790 / $2,750,057 = 5.3% 2. Acid-Test $5,605,347 / 2,750,057 = 2.03 3. Receivables turnover 12564004 / 2669824.5 = 4.7 times 4. Inventory turnover 56,534,254 / 8,517,203 = 6.6 * Profitability ratios 5.
The elimination of short-term debt shows that Home Depot, Incorporated is not using such debt to meet short-term cash requirements. The cause of the elimination of short term debt may be caused by the improved cash position and the economy. Home Depot, Incorporated’s financial position and ratios look good. In fiscal year 2008, the long-term debt-to-equity ratio was 54.4% compared to fiscal year 2007’s 64.3%. In fiscal year 2008, the return on invested capital of continuing operations was 9.5% compared to fiscal year 2007’s 13.9%.
August 14, 2011 Week 6 Project 2 International Reporting Case A.) 1.) Return on Assets $58,333 (net income) / $1,404,726 (total assets) = 4.15% 2.) Return on stockholder’s equity $58,333 (net income) / $176,413 (stockholder’s equity) = 33.07% 3.) Debt to assets ratio $1,202,134 (total debt) / $1,404,726 (total assets) = 87.4% B.)
Therefore, the cost of fixed rate debt equals 8.95% plus 1.1% risk premium, which totaled to 10.5% Cost of Debt = (0.5 x 0.08) + (0.5 x 0.105) = 0.095 = 9.25% [since floating rate and fixed rate debt both weigh 50%, we use the weighted average approach to calculate the total cost of debt rate] Based on historical data analysis below, we get an average income tax rate of 42%. | 1978 | 1979 | 1980 | 1981 | 1982 | 1983 | 1984 | 1985 | 1986 | 1987 | Income before income taxes | 83.5 | 105.6 | 103.5 | 121.3 | 133.7 | 185.1 | 236.1 | 295.7 | 360.2 | 398.9 | Income tax | 35.4 | 43.8 | 40.6 | 45.2 | 50.2 | 76.7 | 100.8 | 128.3 | 168.5 | 175.9 | Tax rate | 42% | 41% | 39% | 37% | 38% | 41% | 43% | 43% | 47% | 44% | | | | | | | | | | | | Average tax rate | 42% | | | | | | | | | | After-tax cost of debt = (1 - 0.42) x 0.0925 = 0.05365 = 5.365% Cost of Equity From Table B and Exhibit 5, * Risk free rate (1-year)= 6.9% Premium = 8.47% * Risk free rate (10-year)= 8.95% Premium = 7.43% ** ** Since A rated bond is considered upper medium grade and the company is A rated, we assume long-term
Accounting Assignment 2013 By : David Step One ….. all calculations are in $000’s $000’s | 2012 | 2011 | 2010 | 2009 | REVENUE | 419,812 | 413,131 | 373,144 | 344,150 | SALES | 418,981 | 411,652 | 372,120 | 343,078 | GROSS PROFIT | 418,981-175,843 = 243,138 | 411,652-171,256 = 240,396 | 372,120-164,789 = 207,331 | 343,078-145,275 = 197,803 | EBIT* | 19,491 | 21,532 | 16,667 | 21,164 | NET PROFIT | 16,103 | 18,218 | 12,331 | 15,649 | -TREND ANALYSIS- | | | | | SALES | 418,981/343,078 *100 = 122.1 | 413,131/343,078 *100 = 120.4 | 373,144/343,078 *100 = 108.8 | 100 | EBIT | 19,491/21,164 *100 = 92.1 | 21,532/21,164 *100 = 101.7 | 16,667/21,164 *100 = 78.8 | 100 | PROFIT | 16,103/15,649 *100 = 102.9 | 18,218/15,649
Case 2.3 Take- Two Interactive Software, Inc. Question 1. Financial Ratios Formula Used 2000 1999 1998 Age of A/R (365/AR turnover) 91.71 115.87 183.42 Age on Inventory (365/Inventory Turnover) 63.5 57.2 57.9 Gross Profit % Gross profit / Net sales 36.00% 29.70% 24.00% Profit Margin % Net income / Net sales 6.50% 5.30% 3.70% Return on assets Net income / Ave. total assets 8.60% 9.90% 8.70% Return On Equity Net income / Ave. stockholder's equity 18.3% 27.1% 30.20% Current Ratio Current assets /Current liabilities 1.41 1.28 1.3 Debt on equity ratio Total liabilities / Total stockholder's equity 0.88 1.72 2.08 Quality of Earnings Ratio Net operating cash flows / Net income -2.21 -1.03 -1.12% A/R Turnover (Net sales / Avg. AR) 3.98 3.15 1.99 Inventory Turnover (COGS / average inventory) 5.75 6.38 6.3 Red Flag 1: The major “Red Flags” would be the quality of earnings ratio. In this case, the quality of earnings for 2000 is -2.21, for 1999 is -1.03, for 1998 is -1.12 which is very low for an investment point of view.
With a debt to equity ratio as above average as Verizon Communications’, the probability that the company will be able to pay off its’ debts if a liquidation was to occur is unlikely. Some factors that may be a contributing factor to Verizon Communications’ currently high debt to equity ratio is the acquisition of other firms, the purchase of complete ownership of Verizon Wireless, and recent deals with Netflix. However, according to macroaxis.com, Verizon Communications’ probability of going bankrupt within the next two years is “less than 46%” (2014). Verizon’s closest competitor, AT&T has about a 43% chance of going bankrupt in the next two years; many of the telecommunications industry companies are within the 43 to 50 percent range of bankruptcy within the next two year (macroaxis.com, 2014). Also, research analyst, Arie Goren, states that “Verizon will continue to benefit from the remarkable leadership of its wireless segment”; he further explains that “Verizon has compelling metrics and good earnings growth prospects”
Tashtego Balik Papan to Singapore: $14,496.50 (3.67 CM x 3,950 tons) Singapore to Balik Papan: $4,000.50 (1.27 CM x 3,150 tons) Total profit contribution: $18,497 Large Vessel Balik Papan to Singapore: $25,139.50 (3.67 CM x 6,850
Overall in this example, this is a risky investment. An investor would not be as eager to hand off more than half of their investment into this company’s debt. Current Ratios ideally should be at a minimum 1.7. This company having a current ratio of 0.97 is significantly less than the ideal displays that they have issues paying their bills on time. Moreover, the Quick
The optional aggregate plan is shown in Table below. Total Cost = $19,032,410.71 Revenue = $55,100,000 Profit = $36,067,589 • If there is no promotion, the optional aggregate plan is shown in table below. Total Cost = $16,062,415.02 Revenue = $53,500,000 Profit = $37,437,584.98 • Observe that a price promotion in September results in a higher profit than a promotion in November, whereas no promotion results in a highest profit. As a result, if offering the discount of $10, Mintendo should not offer any price promotion 3. Suppose Sandra’s fears about increasing outsourcing costs come to fruition and the cost