Reading 35: Financial Analysis Techniques-LOS d 习题精选 2011, following, interpret, valuation, activity

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Session 8: Financial Reporting and Analysis: The Income Statement, Balance Sheet, and Cash Flow Statement
Reading 35: Financial Analysis Techniques

LOS d: Calculate, classify, and interpret activity, liquidity, solvency, profitability, and valuation ratios.

 

 

Given the following income statement and balance sheet for a company:

Balance Sheet
Assets	Year 2003	Year 2004
Cash	500	450
Accounts Receivable	600	660
Inventory	500	550
Total CA	1300	1660
Plant, prop. equip	1000	1250
Total Assets	2600	2910
Liabilities
Accounts Payable	500	550
Long term debt	700	1102
Total liabilities	1200	1652
Equity
Common Stock	400	538
Retained Earnings	1000	720
Total Liabilities & Equity	2600	2910
Income Statement
Sales		3000
Cost of Goods Sold		(1000)
Gross Profit		2000
SG&A		500
Interest Expense		151
EBT		1349
Taxes (30%)		405
Net Income		944

What is the quick ratio for 2004?

A) 3.018.

B) 2.018.

C) 0.331.

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Quick ratio = (cash + marketable securities + receivables) / CL = (450 + 0 + 660) / 550 = 2.018

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Given the following income statement and balance sheet for a company:

Balance Sheet
Assets	Year 2003	Year 2004
Cash	500	450
Accounts Receivable	600	660
Inventory	500	550
Total CA	1600	1660
Plant, prop. equip	1000	1250
Total Assets	2600	2910
Liabilities
Accounts Payable	500	550
Long term debt	700	1002
Total liabilities	1200	1552
Equity
Common Stock	400	538
Retained Earnings	1000	820
Total Liabilities & Equity	2600	2910
Income Statement
Sales		3000
Cost of Goods Sold		(1000)
Gross Profit		2000
SG&A		(500)
Interest Expense		(151)
EBT		1349
Taxes (30%)		(405)
Net Income		944

What is the current ratio for 2004?

A) 0.331.

B) 2.018.

C) 3.018.

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Current ratio = (CA / CL) = (1,660 / 550) = 3.018

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Which of the following is least likely a routinely used operating profitability ratio?

A) Sales/Total Assets

B) Net income/net sales.

C) Gross profit/net sales.

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Sales/Total Assets, or Total Asset Turnover is a measure of operating efficiency, not operating profitability.

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As of December 31, 2007, Manhattan Corporation had a quick ratio of 2.0, current assets of $15 million, trade payables of $2.5 million, and receivables of $3 million, and inventory of $6 million. How much were Manhattan’s current liabilities?

A) $4.5 million.

B) $12.0 million.

C) $7.5 million.

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Manhattan’s quick assets were equal to $9 million ($15 million current assets – $6 million inventory). Given a quick ratio of 2.0, quick assets were twice the current liabilities. Thus, the current liabilities must have been $4.5 million ($9 million quick assets / 2.0 quick ratio).

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Which of the following ratios would least likely measure liquidity?

A) Return on assets (ROA).

B) Quick ratio.

C) Current ratio.

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ROA = (EBIT / average total assets) which measures management's ability and efficiency in using the firm's assets to generate operating profits. Other ratios that measure liquidity (if a company can pay its current bills) besides the quick, cash, and current ratios are the: receivables turnover, inventory turnover, and payables turnover ratios.

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Are the following ratios best classified as profitability ratios?

Ratio #1 – Cash plus short-term marketable investments plus receivables divided by average daily cash expenditures.

Ratio #2 – Earnings before interest and taxes divided by average total assets.

A) Only one of the ratios is a profitability ratio.

B) Both of the ratios are profitability ratios.

C) Neither of the ratios is a profitability ratio.

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(Cash + short-term marketable investments + receivables) divided by average daily cash expenditures is known as the defensive interval ratio. The defensive interval ratio is a liquidity ratio that measures the firm’s ability to pay cash expenditures in the absence of external cash flows, but does not directly measure profitability. EBIT / average total assets is one variation of the return on assets ratio. Return on assets is a profitability ratio that measures the efficiency of managing assets and generating profits.

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Given the following income statement and balance sheet for a company:

Balance Sheet
Assets	Year 2003	Year 2004
Cash	500	450
Accounts Receivable	600	660
Inventory	500	550
Total CA	1300	1660
Plant, prop. equip	1000	1250
Total Assets	2600	2910
Liabilities
Accounts Payable	500	550
Long term debt	700	1102
Total liabilities	1200	1652
Equity
Common Stock	400	538
Retained Earnings	1000	720
Total Liabilities & Equity	2600	2,910
Income Statement
Sales		3000
Cost of Goods Sold		(1000)
Gross Profit		2000
SG&A		500
Interest Expense		151
EBT		1349
Taxes (30%)		405
Net Income		944

What is the gross profit margin?

A) 0.666.

B) 0.333.

C) 0.472.

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Gross profit margin = (gross profit / net sales) = (2,000 / 3,000) = 0.666

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Given the following information about a firm:

• Net Sales = $1,000.
• Cost of Goods Sold = $600. 
• Operating Expenses = $200.
• Interest Expenses = $50.
• Tax Rate = 34%.

What are the gross and operating profit margins?

Gross Operating Margin

Operating Profit Margin

A) 40% 20%

B) 40% 10%

C) 20% 15%

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Gross profit margin = ($1,000 net sales ? $600 COGS) / $1,000 net sales = 400 / 1,000 = 0.4

Operating profit margin = ($1,000 net sales ? $600 COGS ? $200 operating expenses) / $1,000 net sales = $200 / $1000 = 0.2

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An analyst gathered the following data about a company:

• Current liabilities are $300.
• Total debt is $900.
• Working capital is $200.
• Capital expenditures are $250.
• Total assets are $2,000.
• Cash flow from operations is $400.

If the company would like a current ratio of 2, they could:

A) decrease current assets by 100 or increase current liabilities by 50.

B) increase current assets by 100 or decrease current liabilities by 50.

C) increase current assets by 100 or increase current liabilities by 50.

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For the current ratio to equal 2.0, current assets would need to move to $600 (or up by $100) or current liabilities would need to decrease to $250 (or down by $50). Remember that CA ? CL = working capital (500 ? 300 = 200).

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An analyst has gathered the following information about a company:

Balance Sheet
Assets
	Cash	100
	Accounts Receivable	750
	Marketable Securities	300
	Inventory	850
	Property, Plant & Equip	900
	Accumulated Depreciation	(150)
Total Assets		2750
Liabilities and Equity
	Accounts Payable	300
	Short-Term Debt	130
	Long-Term Debt	700
	Common Stock	1000
	Retained Earnings	620
Total Liab. and Stockholder's equity		2750
Income Statement
Sales		1500
COGS		1100
Gross Profit		400
SG&A		150
Operating Profit		250
Interest Expense		25
Taxes		75
Net Income		150

What is the current ratio?

A) 2.67.

B) 0.22.

C) 4.65.

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Current ratio = [100(cash) + 750(AR) + 300(marketable securities) + 850(inventory)] / [300(AP) + 130(short-term debt)] = (2,000 / 430) = 4.65