Essay on Financial Ratios and Net Profit Margin

1177 Words Oct 21st, 2013 5 Pages
Financial Statement Analysis Exercises
(Chapter 2)
2-4.

Consider the following potential events that might have taken place atVodafone Group Plc on 31
March, 2012. For each one, indicate which line items in Vodafone’s balance sheet would be affected and by how much. Also indicate the change to Vodafone’s book value of equity. (In all cases, ignore any tax consequences for simplicity.)
a.
b.

A warehouse fire destroyed £50 million worth of uninsured inventory.

c.

Vodafone used £50million in cash and £50million in new long-term debt to purchase a
£100million of buildings worldwide.

d.

A large customer owing £20million for products it already received declared bankruptcy, leaving no possibility that Vodafonewould
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Compare the net profit margins for Starbucks and Peet’s.

c.

Which firm was more profitable in 2011?

a.

Starbucks’ gross margin =

b.

Starbucks’ net margin =

c.

2-30.

Compare the gross margins for Starbucks and Peet’s.

Starbucks was more profitable in 2011.

6.75
72.7
= 57.69% ; Peet’s gross margin =
= 19.54% .
11.70
372

1.25
17.8
= 10.68% ; Peet’s net margin =
= 4.78% .
11.70
372

In mid-2012, Apple had cash and short-term investments of $27.65 billion, accounts receivable of
$14.30 billion, current assets of $51.94 billion, and current liabilities of $33.06 billion.
a.

What was Apple’s current ratio?

b.

What was Apple’s quick ratio?

c.

What is Apple’s cash ratio?

d.

In mid-2012, Dell had a cash ratio of 0.67, a quick ratio of 1.11 and a current ratio of 1.35.
What can you say about the asset liquidity of Apple relative to Dell?

a.

Apple’s current ratio =

b.

Apple’s quick ratio =

c.

Apple’s cash ratio =

d.

Apple has significantly more liquid assets than Dell relative to current liabilities.

51.94
= 1.57 .
33.06

27.65+14.30
= 1.27 .
33.06

27.65
= 0.84 .
33.06

2

2-35.

Use the data in Problem 8 to determine the change, from 2009 to 2012, in GE’s
a.

book debt-equity ratio?

b.

market debt-equity ratio?

a.

2009 book debt-equity ratio =

524
= 4.99 .
105

2012 book debt-equity ratio =

410
= 3.53 .
116

2-36.

2009 market
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