17-8 through 17.3
Compute (a) inventory turnover and (b) days' sales in inventory. SCC Co. Current Year Info: Net Sales: 48,000 COGS: 40,000 Beg. Inventory: 2,000 End Inventory: 8,000
(a) Inventory Turnover: 48,000/5,000 = 9.6 (b) Days' Sales in Inventory: 365/9.6 = 30.02
Compute the (a) price-earnings ratio and (b) dividend yield. Franklin Co. Current Year Info: Net Income: 220,000 Annual Dividend Per Share: 3 Market Price (common) stock: 150 Earnings per Share: 10
(a) P-E Ratio: 150/10 = 15 (b) Dividend Yield: 3/150 = .02
Compute the (a) profit margin and (b) return on total assets. Edison Co. Current Year Info: Net Sales: 80,000 COGS: 56,000 Net Income: 16,000 Beg. Total Assets: 60,000 End Total Assets: 68,000
(a) Profit Margin: 16,000/80,000 = .2 (b) Return on Total Assets: 16,000/64,000 = .25
Compute the (a) debt-to-equity ratio and (b) times interest earned. Paddy's Pub Current Year Info: Earnings before interest & tax: 30,000 COGS: 17,000 Interest Expense: 1,500 Total Assets: 70,000 Total Liabilities: 20,000 Total Equity: 50,000
(a) debt-to-equity ratio: 20,000/50,000 = .4 (b) times interest earned: 30,000/1,500 = 20
Inventory Turnover Ratio
COGS/Avg. Inventory
Return on Total Assets
Net Income/Avg. Total Assets
Profit Margin ratio
Net Income/Net Sales
Price-Earnings Ratio
market price per share/earnings per share
debt-to-equity ratio
total liabilities/total equity
times interest earned ratio
earnings before interest & tax/interest expense
Determine whether the percent change from last year to the current year is favorable (F) or unfavorable (U). 1. Profit Margin: Prior Yr: 8% Cur. Yr: 9% 2. Debit Ratio: Prior Yr: 42% Cur. Yr: 47% 3. Gross Margin: Prior Yr: 46% Cur. Yr: 34% 4. Acid-Test Ratio: Prior Yr: 1.15 Cur. Yr: 1.0 5. A.R. Turnover: Prior Yr: 5.5 Cur. Yr: 6.7 6. Basic EPS: Prior Yr: $1.10 Cur. Yr: $1.25 7. Inventory Turnover: Prior Yr: 3.4 Cur. Yr: 3.6 8. Dividend Yield: Prior Yr: 1.2% Cur. Yr: 2%
1. F 2. U 3. U 4. U 5. U 6. F 7. F 8. F
Days' Sales in Inventory
365/Inventory Turnover
Compute the total asset turnover. Dundee Co. Current Year Info: Net Sales: 80,000 COGS: 60,000 Beg. Total Assets: 115,000 End Total Assets: 85,000
80,000/100,000 = .8
Dividend Yield ratio
annual dividends per share/market price