Question

Assume you are given the following abbreviated financial​ statements:

Current assets		​$199
Fixed and other assets		​$368
Total assets		$ 567
Current liabilities		​$128
​ Long-term debt		​$106
​ Stockholders' equity		​$333
Total liabilities and equity		$ 567
Common shares outstanding	19 million shares
Total revenues		​$882
Total operating costs and expenses		​$771
Interest expense		​$16
Income taxes		​$33
Net profits		$ 62
Dividends paid to common stockholders		​$19

On the basis of this​ information, calculate as many​ liquidity, activity,​ leverage, profitability, and common stock measures as you can. ​(Note​: Assume the current market price of the common stock is $71.67 per​ share.)

Liquidity measures

The current ratio is___ Round to two decimal​ places.)

The​ firm's net working capital is $____million. ​(Round to the nearest million​ dollars.)

Activity measures

The​ firm's total asset turnover is ___ (Round to two decimal​ places.)

Leverage measures

The​ firm's debt-equity ratio is __ (Round to two decimal​ places.)

The​ firm's times interest earned ratio is __ (Round to two decimal​ places.)

Profitability measures

The​ firm's net profit margin is ___​%. (Round to two decimal​ places.)

The​ firm's return on assets​ (ROA) is ___%. (Round to two decimal​ places.)

The​ firm's return on equity​ (ROE) is __​%. (Round to two decimal​ places.)

Common stock measures

The earnings per share​ (EPS) is $___ ​(Round to the nearest​ cent.)

The​ P/E ratio is ___ ​(Round to two decimal​ places.)

The sales per share is $___ ​(Round to the nearest​ cent.)

The​ price-to-sales ratio is ___ ​(Round to two decimal​ places.)

The amount of dividends per share is $__ ​(Round to the nearest​ cent.)

The dividend yield on the common stock is ___% ​(Round to two decimal​ places.)

The dividend payout ratio is ___% ​(Round to two decimal​ places.)

The​ firm's book value per share is $___​(Round to two decimal​ places.)

The​ price-to-book value is $___​(Round to the nearest​ cent.)

Answer 1

Answer of Part a:

Current Ratio = Current Assets / Current Liabilities
Current Ratio = $199 / $128
Current Ratio = 1.55

Answer of Part b:

Net Working Capital = Current Assets – Current Liabilities
Net Working Capital = $199 - $128
Net Working Capital = $71

Answer of Part c:

Total Asset Turnover = Sales / Total Assets
Total Asset Turnover = $882 / $567
Total Asset Turnover = 1.56 times

Answer of Part d:

Debt-Equity Ratio = Long term Debt / Stockholder Equity
Debt-Equity Ratio = $106 / $333
Debt-Equity Ratio = 0.32

Answer of Part e:

EBIT = Revenue – Total Operating Costs and Expenses
EBIT = $882 - $771
EBIT = $111

Times Interest Earned Ratio = EBIT / Interest Expense
Times Interest Earned Ratio = $111 / $16
Times Interest Earned Ratio = 6.94

Answer of Part f:

Net Income = EBIT – Interest Expense – Income Taxes
Net Income = $111 - $16 - $33
Net Income = $62

Net Profit Margin = Net Income / Sales *100
Net Profit Margin = $62 / $882 *100
Net profit Margin = 7.03%

Answer of Part g:

Return on Assets = Net Income / Total Assets *100
Return on Assets = $62 / $567 *100
Return on Assets = 10.93%

Answer of Part h:

Return on Equity = Net Income / Stockholder Equity *100
Return on Equity = $62 / $333 *100
Return on Equity = 18.62%