Financial Statement Analysis

Question no 1
Company has the following balance sheet and income statement for 2001

Income statement

Net Sales 23,303

Cost of Goods Sold 22,026
Gross Income 1,277
Admin Expense 457
Other Income 67
EBIT 887
Finance Income 19
Finance Expense 142
Share of Post-Tax profit
from Joint Ventures 24
Pretax Income 788
Income Taxes 174
Net Income 614
Common Shares Outstanding 1,882

Balance sheet

Cash & Equivalents 517

Accounts Receivable 306
Inventories 987

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Financial Statement Analysis

Current Derivative instruments 91

Current Assets 1,901
Net PP&E 9,804
Intangibles 171
Investments in Joint Ventures 532
Other Non-current Assets 287
Total Assets 12,695

Short Term Debt 165

Accounts Payable 2,726
Taxes Payable 148
Other Current Liabilities 76

Current Liabilities 3,115

Long Term Debt 2,617
Other LT Liabilities 1,229
Total Liabilities 6,961
Non-controlling Interests 1
Stockholder's Equity 5,733

Total Liabilities & Stockholder's Equity 12,695

On the basis of this information compute the following:-

1. the current ratio
2. the acid-test ratio
3. receivable turnover
4. The average collection period
5. the inventory turnover ratio
6. return on assets
7. debt total assets ratio
8. the gross profit margin,

Questions no 2:-
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Financial Statement Analysis

Balance Sheet
Assets Liabilities & Shareholder Equity
Cash 178 bank loans 448
Account Receivable 678 Account Payable 148
Inventories 1329 Accrued Taxes 36
Prepaid expense 21 Other accrued liabilities 191
Accumulated tax payments 35 Current liabilities 823
Current assets 2241 Long term debt 631
Fixed Assets at cost 1596 Shareholders’ Equity
Less: accumulated depreciation 857 Common stock 421
Net fixed assets 739 Additional paid in capital 361
Investment, long term 65 Retained Earnings 1014
Other Assets, long term 205 Total shareholder equity 1796
Total assets 3250 Total liabilities &shareholder equity 3250

Income Statement
Net Sales 3992
Cost of goods sold 2680
Gross profit 1312
Selling & General expenses 912
Earnings before interest & taxes 400
Interest expense 85
Earnings before taxes 315
Incomes taxes (federal & state) 114
Net profit after taxes 201
Cash dividends 143
Increase in retained earnings 58

Q 2) With the help mentioned balance sheet and incomes statement compute the
following formulas and their answers?
a) Current Ratio
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Financial Statement Analysis

b) Acid test or Quick Ratio

c) Inventory Turnover
d) Inventory Turnover in days
e) Receivable Turnover
f) Average Collection Period
g) Debt-to-Equity Ratio
h) Debt-to-total-Assets Ratio
i) Return on Assets
j) Net Profit Margin

Questions no 3:-
Balance Sheet
Assets Liabilities & Shareholder Equity
Cash 175 bank loans 356
Account Receivable 740 Account Payable 136
Inventories 1235 Accrued Taxes 127
Prepaid expense 17 Other accrued liabilities 164
Accumulated tax payments 29 Current liabilities 783
Current assets 2196 Long term debt 627
Fixed Assets at cost 1538 Shareholders’ Equity
Less: accumulated depreciation 791 Common stock 421
Net fixed assets 747 Additional paid in capital 361
Investment, long term _ Retained Earnings 956
Other Assets, long term 205 Total shareholder equity 1738
Total assets 3148 Total liabilities &shareholder equity 3148

Income Statement

Net Sales 3721

Cost of goods sold 2500

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 Financial Statement Analysis

Gross profit 1221

Selling & General expenses 841
Earnings before interest & taxes 380
Interest expense 70
Earnings before taxes 310
Incomes taxes (federal & state) 112
Net profit after taxes 198
Cash dividends 130
Increase in retained earnings 68

Q 3) With the help mentioned balance sheet and incomes statement compute the
following formulas and their answers?
a) Current Ratio
b) Acid test or Quick Ratio
c) Times Interest Earned
d) Inventory Turnover
e) Receivable Turnover
f) Average Collection Period
g) Debt-to-Equity Ratio
h) Debt-to-total-Assets Ratio
i) Return on Assets
j) Gross Profit

Question no 4
Company has the following balance sheet and income statement for 2002
Balance sheet

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 Financial Statement Analysis

Cash & Equivalents 739

Accounts Receivable 286
Inventories 938
Current Derivative instruments 69

Current Assets 2,032

Net PP&E 9,329
Intangibles 160
Investments in Joint Ventures 566
Other Non-current Assets 253

Total Assets 12,340

Short Term Debt 150

Accounts Payable 2,740
Taxes Payable 149
Other Current Liabilities 97
Current Liabilities 3,136
Long Term Debt 2,617
Other LT Liabilities 958

Total Liabilities 6,711

Non-controlling Interests 0
Stockholder's Equity 5,629

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Financial Statement Analysis

Total Liabilities & Stockholder's Equity 12,340

Income statement

Net Sales 22,294

Cost of Goods Sold 21,083

Gross Income 1,211
Admin Expense 419
Other Income 82
EBIT 874
Finance Income 35
Finance Expense 138
Share of Post-Tax profit from Joint Ventures 28
Pretax Income 799
Income Taxes 201
Net Income 598

On the basis of this information compute the following:-

1. the current ratio
2. the acid-test ratio
3. receivable turnover
4. the average collection period
5. return on assets
6. debt total assets ratio
7. the gross profit margin,

Question no 5
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Financial Statement Analysis

Company has the following balance sheet and income statement for 2000

Balance sheet Income statement

Cash 400 Net sale 12680

Account receivable 130 Cost of goods sold 8930
0
Inventories 2000 Gross 3750
profit
Current assets 3800 Selling, general, and
Net fixed assets 3320 administration expenses 2230
Total assets 7120 Interest expense 460

Profit before taxes 1060

Account payable 320 Taxes 390
Accruals 260 profit after taxes 670
Short term loan 1100
Current liabilities 1680
Long-term debt 2000
Net worth 3440
Total liabilities and net 7120
worth

On the basis of this information, compute:-

1. the current ratio
2. the acid-test ratio
3. receivable turnover
4. the average collection period
5. the inventory turnover ratio
6. return on assets
7. total assets ratio
8. gross profit margin
9. average sale period

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Financial Statement Analysis

Formulas:-
1. Current Ratio:-
Current Ratio = Current Assets / Current Liabilities

2. Acid test or Quick Ratio:-

Acid test or Quick Ratio = Current Assets – Inventories / Current Liabilities

3. Times interest Earned:-

Times Interest Earned = Earnings before Interest and Taxes (EBIT) / Interest Expense

4. Inventory Turnover:-
Inventory Turnover = Cost of goods sold / Inventory

5. Average sale period or Inventory Turnover in days:-

Average Sale Period = 365 / Inventory Turnover

6. Receivable Turnover:-
Receivable Turnover = Net Sales / Receivables

7. Average collection Period or Receivable turnover in days:-

Average Collection Period = 365 / Receivable turnover

8. Debt-to-Equity Ratio:-
Debt-to-Equity Ratio = Total Debt / Shareholder’s Equity
(How to find total Debt) Total Debt = Current Liabilities + Long term Debt

9. Debt-to-total-Assets Ratio:-
Debt-to-total-Assets Ratio = Total Debt / Total Assets

10. Return on Assets:-

Return on Assets = Net profit after taxes / Total Assets

11. Gross Profit Margin:-

Gross Profit = Net sales – Cost of goods sold / Net Sales

12. Net Profit Margin:-

Net Profit Margin = Net Profit after Taxes / Net Sales

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