Financial Accounting Intro Concepts Meth/Uses
14th Edition
ISBN: 9781285595047
Author: Weil
Publisher: Cengage
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Make Analysis into an evaluation of the firm’s liquidity, activity, debt, profitability and market ratios.
Historical and Industry Average Ratios
HTS Software , Inc.
Industry
Ratio
2010
2011
2011
Liquidity Ratios
Current Ratio
2.6
2.08
2.7
Quick Ratio
1.8
1.32
1.75
Activity Ratios
Inventory Turnover
4.5
3.00
4.7
Average Collection Period
40days
53days
42 days
Total Asset Turnover
1.2
0.80
1
Debt Ratios
Debt Ratio
20%
28%
21%
Times Interest Earned
9
6
8.9
Profitability Ratios
Gross Profit Margin
43%
43%
44%
Operating Profit Margin
30%
26%
32%
Net Profit Margin
20%
17%
21%
Return on total assets
12%
14%
13%
Return on Equity
15%
19%
16%
Market Ratios
Price/Earnings Ratio
7.3
4.4
8
Please find below Financial Statement extracts of Nestle from year 2017 and 2018. Based on this information please answer following question from a perspective of Financial Analyst (justify your answers with data as well the reason for choosing your ratios for your analysis) .The company’s total assets at year-end 2016 were CHF 131,900 million. What reasonable conclusions an analyst might make about the companies efficiency, Companies solvency, Liquidity and Profitability?
In millions of CHF
Notes
2018
2017 *
Sales
3
91,439
89,590
Cost of goods sold
(46,070)
(45,571)
Trading operating profit
3
13,789
13,277
Operating profit
13,752
10,156
Profit before taxes, associates and joint ventures
12,991
9,460
Taxes
13
(3,439)
(2,773)
Profit for the year
10,468
7,511
Notes
2018
2017 *
Assets
Current assets
Cash and cash equivalents
12/16…
Suppose the years 2005 to 2009 were a period of rapid growth for a certain chain of coffeehouses and the company's revenues grew by more than 50% during that period. Use the hypothetical financial data for the company to answer the questions.
chart shown (attached) then questions:
(A): Calculate the asset turnover ratio for 2008 and 2009. (Round your answers to two decimal places.)
2008=
2009=
(B):
Calculate the net profit margin (as a %) for 2007, 2008, and 2009. (Round your answers to the nearest tenth of a percent.)
2007 = %
2008 = %
2009 = %
(C): Calculate the return on investment (as a %) for 2007, 2008, and 2009. (Round your answers to the nearest tenth of a percent.)
2007 = %
2008 = %
2009 = %
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