Financial ratios

Daniel Kevins

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Here are simplified financial statements of Phone Corporation from a recent year:

   

INCOME STATEMENT
(Figures in millions of dollars)
  Net sales 12,300  
  Cost of goods sold 3,610  
  Other expenses 4,022  
  Depreciation 2,248  
 
  Earnings before interest and taxes (EBIT) 2,420  
  Interest expense 640  
 
  Income before tax 1,780  
  Taxes (at 35%) 623  
 
  Net income 1,157  
  Dividends 756  
 

    

BALANCE SHEET
(Figures in millions of dollars)
  End of Year Start of Year
  Assets    
     Cash and marketable securities 80   149  
     Receivables 1,932   2,310  
     Inventories 142   193  
     Other current assets 822   887  
 
        Total current assets 2,976   3,539  
     Net property, plant, and equipment 19,883   19,825  
     Other long-term assets 4,126   3,680  
 
        Total assets 26,985   27,044  
 
  Liabilities and shareholders’ equity    
     Payables 2,474   2,950  
     Short-term debt 1,374   1,528  
     Other current liabilities 766   742  
 
        Total current liabilities 4,614   5,220  
     Long-term debt and leases 9,259   8,444  
     Other long-term liabilities 6,088   6,059  
     Shareholders’ equity 7,024   7,321  
 
        Total liabilities and shareholders’ equity 26,985   27,044  
 

   

Calculate the following financial ratios: (Use 365 days in a year. Do not round intermediate calculations.Round your answers to 2 decimal places.)

    

       
 a. Long-term debt ratio [removed]  
 b. Total debt ratio [removed]  
 c. Times interest earned [removed]  
 d. Cash coverage ratio [removed]  
 e. Current ratio [removed]  
 f. Quick ratio [removed]  
 g. Operating profit margin [removed]  %
 h. Inventory turnover [removed]  
 i. Days in inventory [removed]  days
 j. Average collection period [removed]  days
 k. Return on equity [removed]  %*
 l. Return on assets [removed]  %
 m. Return on capital [removed]  %**
 n. Payout ratio [removed]  

 

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Daniel Kevins

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