DEBT MANAGEMENT RATIOS Use Apparel’s financial statements in Exercise 12-65 to respond to the following requirements. Exercise 12-65 PREPARATION OF COMMON SIZE STATEMENTS FOR VERTICAL ANALYSIS Financial statements for Apparel, Inc., appear below.

DEBT MANAGEMENT RATIOS Use Apparel’s financial statements in Exercise 12-65 to respond to the following requirements. Exercise 12-65 PREPARATION OF COMMON SIZE STATEMENTS FOR VERTICAL ANALYSIS Financial statements for Apparel, Inc., appear below.

Financial Accounting

14th Edition

ISBN:9781305088436

Author:Carl Warren, Jim Reeve, Jonathan Duchac

Publisher:Carl Warren, Jim Reeve, Jonathan Duchac

Chapter17: Financial Statement Analysis

Section: Chapter Questions

Problem 2PEA

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Effect of Industry Characteristics on Financial Statement Relations. Effective financial statement analysis requires an understanding of a firms economic characteristics. The relations between various financial statement items provide evidence of many of these economic characteristics. Exhibit 1.22 (pages 6061) presents common-size condensed balance sheets and income statements for 12 firms in different industries. These common-size balance sheets and income statements express various items as a percentage of operating revenues. (That is, the statement divides all amounts by operating revenues for the year.) Exhibit 1.22 also shows the ratio of cash flow from operations to capital expenditures. A dash for a particular financial statement item does not necessarily mean the amount is zero. It merely indicates that the amount is not sufficiently large enough for the firm to disclose it. Amounts that are not meaningful are shown as n.m. A list of the 12 companies and a brief description of their activities follow. A. Amazon.com: Operates websites to sell a wide variety of products online. The firm operated at a net loss in all years prior to that reported in Exhibit 1.22. B. Carnival Corporation: Owns and operates cruise ships. C. Cisco Systems: Manufactures and sells computer networking and communications products. D. Citigroup: Offers a wide range of financial services in the commercial banking, insurance, and securities business. Operating expenses represent the compensation of employees. E. eBay: Operates an online trading platform for buyers to purchase and sellers to sell a variety of goods. The firm has grown in part by acquiring other companies to enhance or support its online trading platform. F. Goldman Sachs: Offers brokerage and investment banking services. Operating expenses represent the compensation of employees. G. Johnson Johnson: Develops, manufactures, and sells pharmaceutical products, medical equipment, and branded over-the-counter consumer personal care products. H. Kelloggs: Manufactures and distributes cereal and other food products. The firm acquired other branded food companies in recent years. I. MGM Mirage: Owns and operates hotels, casinos, and golf courses. J. Molson Coors: Manufactures and distributes beer. Molson Coors has made minority ownership investments in other beer manufacturers in recent years. K. Verizon: Maintains a telecommunications network and offers telecommunications services. Operating expenses represent the compensation of employees. Verizon has made minority investments in other cellular and wireless providers. L. Yum! Brands: Operates chains of name-brand restaurants, including Taco Bell, KFC, and Pizza Hut. REQUIRED Use the ratios to match the companies in Exhibit 1.22 with the firms listed above.
Effect of Industry Characteristics on Financial Statement Relations. Effective financial statement analysis requires an understanding of a firms economic characteristics. The relations between various financial statement items provide evidence of many of these economic characteristics. Exhibit 1.23 (pages 6263) presents common-size condensed balance sheets and income statements for 12 firms in different industries. These common-size balance sheets and income statements express various items as a percentage of operating revenues. (That is, the statement divides all amounts by operating revenues for the year.) Exhibit 1.23 also shows the ratio of cash flow from operations to capital expenditures. A dash for a particular financial statement item does not necessarily mean the amount is zero. It merely indicates that the amount is not sufficiently large for the firm to disclose it. A list of the 12 companies and a brief description of their activities follow. A. Abercrombie Fitch: Sells retail apparel primarily through stores to the fashionconscious young adult and has established itself as a trendy, popular player in the specialty retailing apparel industry. B. Allstate Insurance: Sells property and casualty insurance, primarily on buildings and automobiles. Operating revenues include insurance premiums from customers and revenues earned from investments made with cash received from customers before Allstate pays customers claims. Operating expenses include amounts actually paid or expected to be paid in the future on insurance coverage outstanding during the year. C. Best Buy: Operates a chain of retail stores selling consumer electronic and entertainment equipment at competitively low prices. D. E. I. du Pont de Nemours: Manufactures chemical and electronics products. E. Hewlett-Packard: Develops, manufactures, and sells computer hardware. The firm outsources manufacturing of many of its computer components. F. HSBC Finance: Lends money to consumers for periods ranging from several months to several years. Operating expenses include provisions for estimated uncollectible loans (bad debts expense). G. Kelly Services: Provides temporary office services to businesses and other firms. Operating revenues represent amounts billed to customers for temporary help services, and operating expenses include amounts paid to the temporary help employees of Kelly. H. McDonalds: Operates fast-food restaurants worldwide. A large percentage of McDonalds restaurants are owned and operated by franchisees. McDonalds frequently owns the restaurant buildings of franchisees and leases them to franchisees under long-term leases. I. Merck: A leading research-driven pharmaceutical products and services company. Merck discovers, develops, manufactures, and markets a broad range of products to improve human and animal health directly and through its joint ventures. J. Omnicom Group: Creates advertising copy for clients and is the largest marketing services firm in the world. Omnicom purchases advertising time and space from various media and sells it to clients. Operating revenues represent commissions and fees earned by creating advertising copy and selling media time and space. Operating expenses includes employee compensation. K. Pacific Gas Electric: Generates and sells power to customers in the western United States. L. Procter Gamble: Manufactures and markets a broad line of branded consumer products. REQUIRED Use the ratios to match the companies in Exhibit 1.23 with the firms listed above.
Industry benchmarks can be drawn from quantitative financial ratio information calculated from individual firms. All of the following are key financial ratios that can help establish benchmarks except: Group of answer choices D. Funds from operations/total assets A. EBITDA C. Long-term debt/capital B. Operating income/sales
Kindly analyze the following ratios: Debt-to-Equity RatioAsset-to-Equity RatioAsset-to-Liability RatioInterest Rate Coverage RatioEarnings per share (EPS) RIZAL COMMERCIAL BANKING CORPORATION AND SUBSIDIARIES Consolidated Parent Unaudited Audited Unaudited Audited 31-Mar-22 31-Dec-21 31-Mar-22 31-Dec-21 Return on Average Assets (ROA)* 1/ 0.9% 0.8% 0.9% 0.9% Return on Average Equity (ROE)* 2/ 8.0% 6.7% 8.0% 6.7% Risk-based Capital Adequacy Ratio (CAR) 14.8% 15.2% 14.5% 14.9% Common Equity Tier 1 Ratio 11.7% 12.2% 11.3% 11.8% Non-Performing Loans (NPL) Ratio* 3/ 3.2% 3.3% 3.1% 3.2% Non-Performing Assets (NPA) Ratio*4/ 2.6% 2.7% 2.5% 2.6% Net Interest Margin (NIM) 4.1% 4.1% 4.0% 4.1% Cost-to-Income Ratio 59.4% 61.9% 58.6% 61.4% Loans-to-Deposit Ratio* 5/ 76.6% 76.3% 75.3% 74.9% Current Ratio 0.5 0.6 0.5 0.6…
Presented below are selected financial data from the Medtronic 2018 annual report. Using the ratio definitions from Exhibit 4.6, calculate the following liquidity and solvency ratios: cash and marketable securities to total assets, quick ratio, current ratio, long-term debt to total assets, long-term debt to shareholders’ equity, and the interest coverage ratio. Evaluate Medtronic’s liquidity and solvency.
Evaluate the company’s solvency and capital structure using leverage ratios and interpret your findings using the following ratios marks):a. Debt Ratiob. Equity Ratioc. Debt to Equity Ratiod. Long term debt to total capitalizatione. Times Interest Earned Ratio
Calculate the following ratios from balance sheet statement for any organization: • Current ratio• Debt ratio• Quick ratio• Equity multiplier• Debt to equity ratio
a report based on information aboutMicrosoft Corporation. You should approach this from the perspectiveof upper-level managers. Included in the report should be: An evaluation of the analysis provided in the annual reportA discussion of other things to consider, besides the ratiosprovided, that may affect the performance of the company.Discuss the factors that may be affecting Bond and Stockvaluation and performance on secondary markets.
Assigning a Long-Term Debt Rating Using Financial Ratios Refer to the information below from Stryker’s 2018 financial statements. Use the information to answer the requirements ($ millions). Revenue $13,601 Interest expense, gross $181 Depreciation expense 306 Dividends, including to noncontrolling interest 717 Amortization expense 417 Cash and cash equivalents 3,616 Operating profit (EBIT) 2,537 Marketable securities 83 Total debt 9,859 Average assets 24,713 Cash from operating activities 2,610 CAPEX 572 Funds from operations 2,852 a. Compute the following 10 Moody’s metrics for Stryker for 2018.Round all answers (except Revenue) to one decimal place (example for percentage ratios: 0.2345 = 23.5%). Ratio Debt / EBITDA Answer EBITA to interest expense Answer Revenue ($ millions) Answer Retained Cash Flow / Net Debt Answer EBITA margin Answer Operating margin Answer FFO / Debt Answer (FFO + Interest Expense)/Interest Expense Answer…
Assigning a Long-Term Debt Rating Using Financial Ratios Refer to the information below from Stryker’s 2018 financial statements. Use the information to answer the requirements ($ millions). Revenue $13,601 Interest expense, gross $181 Depreciation expense 306 Dividends, including to noncontrolling interest 717 Amortization expense 417 Cash and cash equivalents 3,616 Operating profit (EBIT) 2,537 Marketable securities 83 Total debt 9,859 Average assets 24,713 Cash from operating activities 2,610 CAPEX 572 Funds from operations 2,852 a. Compute the following 10 Moody’s metrics for Stryker for 2018.Round all answers (except Revenue) to one decimal place (example for percentage ratios: 0.2345 = 23.5%). Ratio Debt / EBITDA Answer EBITA to interest expense Answer Revenue ($ millions) Answer Retained Cash Flow / Net Debt Answer EBITA margin Answer Operating margin Answer FFO / Debt Answer (FFO + Interest Expense)/Interest Expense Answer…
Based on financial reports prepare ratio analysis and interpret the result of the Following ratios: B) Leverage : Debt to Total Assets Ratio, Debt to Equity Ratio
Which of the following financial measures are used to determine a company's credit rating? a)A company's current ratio, quick ratio, inventory turnover ratio, and default risk ratio b) Its ratio of annual interest payments to net profits, current ratio, working capital ratio, debt-equity ratio, and percentage return on capital employed c) Its loans outstanding as a percentage of total revenues, default risk ratio, inventory turnover ratio, and long-term debt-to-equity ratio d) Its total debt-equity ratio, current ratio, working capital ratio, and ratio of prior-year cash flow from operations to prior-year interest payments e) The percentage by which prior-year cash flow from operations covers a company's prior-year interest payments, the company's debt-asset ratio, its dividend payout ratio, and its default risk ratio