Cash Debt Coverage Ratio - Because it uses cash provided by operating activities, it may provide a better representation of liquidity. Calculate the ratio for Kellogg for 2007 and 2006 Is the coverage adequate? Probably so. Kellogg’s coverage is better than that of General Mills, and it approximates a commonly accepted threshold of .40. Receivables Turnover Ratio – Measures the number of times, on average, a company collects receivables during the period.
SciTronics had $ 75,000 of owners’ equity and earned $ 14,000 after taxes in 2008. Its return on equity was 18.67% an improvement from the 8.2% earned in 2005. Activity Ratios: How well does the company employ its assets? 1. Total asset turnover for SciTronics in 2008 can be calculated by dividing $ 244,000 into $ 159,000.
The ROE for Sepracor is 33.07%, which means that 33.07 cents of assets are created for each dollar that was originally invested. It measures how Sepracor is using its money. The higher the return on equity, the more funds available to be invested in improving business operations without having to invest more capital. Debt to asset ratio measures the company’s solvency, and the higher the ratio, the lower the borrowing capacity for the company. I would make an investment in the company’s 5% convertible bonds.
Learning Team Ratio Analysis Paper Kudler Fine Foods Liquidity Ratio Upon reviewing the financial statements of Kudler Fine Foods, I came up with the following financial ratio for the company: The Kudler Fine Foods’ current total asset is $1,971,000 and the total current liabilities is $116,290. The company’s current ratio is 16.95. (1,971,000/116,290) = 16.949=16.5 Therefore, for every $1 that our company owes in short term, there is $16.95 in assets available that we can convert to cash in short term. Our company’s Debt Ratio is Total Debt is divided by our Total Assets. Our Total Current Liabilities are as follows: Accounts Payable 96,500 Sales Tax Payable 3,950 Payroll Tax Payable 15,840 and our Total Long Term Liabilities are the following: Long Term Notes Payable 630,000 Therefore, the Total Liabilities we have is $ $746,290 and our Total Assets is $2,675,250.
Solvency ratios this is one of many ratios used to measure a company’s ability to meet long-term obligations. The solvency ratio measures the size of a company’s after-tax income, excluding non-cash depreciation expenses, as compared to the company’s total debt obligations. It provides a measurement of how likely a company will be to continue meeting its debt obligations. Users who may be interested in each type of ratio? Liquidity ratios are used by suppliers and other trade creditors.
Chapter 9 Required 1. Review the earnings per share forecasts. Comment on how these forecasts could influence the market value of the common stock. 2. What is the price/earnings ratio for your company? 3.
Which financial statement reports the amounts of cash that the firm generated and distributed during a particular time period? statement of retained earnings Income statement Statement of cash flows Balance sheet We commonly measure the risk-return relationship using which of the following? Expected returns Coefficient of variation Correlation coefficient Standard deviation What's the current yield of a 6 percent coupon corporate bond quoted at a price of 101.70? 6.1 percent 10.2 percent 6.0 percent 5.9 percent Which financial statement reports a firm's assets, liabilities, and equity at a particular point in time? Statement of cash flows Balance sheet Statement of retained earnings Income statement As new capital budgeting projects arise, we must estimate__________.
Let (R/P)1 equal the initial value of the real rental price of capital, and (R/P)2 equal the final real rental price of capital after the labour force increases by 10 percent. The rental price increases by The real rental price also increases by 6.9 percent. Let (W/P)1 equal the initial value of the real wage, and (W/P)2 equal the final real wage after the labour force increases by 10 percent. The real wage increases by The real wage decreases by 2.8 percent. c) Using the same logic as (b) So, output increases by about 3 percent.
Which of the following factors would explain an increase in retained earnings? a. b. c. d. 3. Net loss Net Income Dividends Investment by stock holders Which of these items would be accounted for as an expense? a. Repayment of a bank loan b.
The result is this one: 0.082 (1-0.3879) = 0.05019. The other after tax costs are 0.050498 and 0.05738, respectively for $133 million bond and $100million bond. From the information taken above we conclude that the Cost of total debt = (0.05738 + 0.050498 + 0.05019) / 3 = 0.0526 (5.26%) Cost of the equity, we calculated on question nr 3, and it is 17.6525 %. To sum up, the cost of the capital is nothing more than the sum of the cost of equity and cost of debt, the calculation is this: Cost of capital = 17.6525 % + 5.26% = 22.91 % QUESTION 5: If Wonder Bar uses book value rather than market value to determine its capital structure, what is the impact of the cost of capital on its budgeting decisions? Market value is simply the amount of money that people are willing to pay for a stock.