Essay on Assignment 2.2: Ratio Analysis

7. A company finds that its fixed asset turnover (net sales/fixed assets) has fallen below one. What does this indicate?

Asset turnover (T/O) demonstrates how effective the asset base is in generating top line revenue. High T/O values have implications in terms of plant structure, level of backward integration, and aggressiveness of pricing policy. CUMULATIVE PROFITS Formula Cumulative Profits is the total Description of all year 's Net Profit. :

As you can see from this mock Balance Sheet of our business, it (1) has enough assets to pay our debts when they are due, and (2) the claims of short and long-term creditors on

If MCI wants to issue $500 million of 20-year subordinated debentures, we first calculate the interest payment, which is $62.5. The total interest payment would be $116.6 by adding up the previous net interest, so we can calculate the interest coverage ratio by dividing the operating income in 1983 by the total interest payment, which is 2.53. Then we look up the

* Return on assets (ROA) – ROA shows how successful a company is in generating profits on the amount of assets they own. Since assets consist of debt and equity, ROA is a measure of how well a company converts investment dollars into profit. The higher the percentage, the more profit a company is generating per dollar of investment. Similar to ROS, this ratio needs to be looked at compared to the industry as different industries have different requirements that can affect ROA. For example, companies in the airline and mining industries need expensive assets to operate so will have lower ROA’s compared to companies in the pharmaceutical or advertising industries.

The net income on the income statement is used on the equity section for the balance sheet. When the net income increases of decreases because of revenue or expenses this carries over to the balance sheet under the equity section and reflects those fluctuations. This helps to give a better

In order to conclude on the net earnings, a trend was calculated with regards to the return on invested capital (assets). The trend, as computed from the table and graph in annexure 2, shows

More recent data suggest that TOF ratios measured with EMG, MMG, or AMG must recover to values > 0.9 to ensure optimal patient safety. Data derived from volunteer studies have demonstrated that pharyngeal dysfunction and an increased risk for aspiration occur at TOF ratios < 0.9.[7, 51,] 16 Impaired inspiratory flow and partial upper airway obstruction have been observed frequently at TOF ratios of 0.8.[8] Furthermore, subtle levels of neuromuscular blockade may produce distressing symptoms in awake patients, which may persist even at TOF ratios >0.9.[52] 17 These data suggest that the new “gold standard” for the minimal acceptable level for neuromuscular recovery is TOF ratio of 0.9.

3-2. Are the following balance sheet items (A) assets, (L) liabilities, or (E) stockholders’ equity?

This tells us what the company can do with what it has, i.e. how many dollars of earnings they derive from each dollar of assets they control. Return on assets gives an indication of the capital intensity of the company, which will depend on the industry; As Star River requires large initial investments it generally has lower return on assets.

Abbott’s fixed asset and total asset turnover ratios can tell us how well the firm uses its assets to generate revenue. The fixed asset ratio provides the proportion of sales to fixed assets and tells us how much revenue is

Lastly as for interest cover ratio, it has increased in Year 2011 as compared to Year 2010. This implies that

When analyzing Microsoft’s capital structure the percentage of liabilities that construct the firm’s total assets is 42.87%. Showing that less than half of the firm’s total assets are represented by liabilities. Now the percentage of the total assets that are represented by stockholders’ equity is 57.12%. Showing that stockholder’s equity represents slightly more than half of

3) Based on the data in Exhibit 7 and the definition of operating income gains given

Consolidated debt at the end of fiscal year 2013 summed up to $1.54 billion, of which $24.1 million is classified as a current liability. As explained in the Annual Report, historically, large portions of cash flows from operations have been used to make principal and interest payments. Shown in Exhibit VI is a schedule of principal and interest payments standing as of December 31, 2013. It is evident from this data that operations carry the burden of relatively high levels of debt. In fact, terms on fixed rate notes establish that if the company achieves “maximum leverage ratios of less than 4.5x total debt to EBITDA”, it may elect not to make the scheduled principal amortization payments. In essence, the contract ask that if the net debt to EBITDA ratios determines that the company will take more than four and a half years to repay its loan while