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标题: Reading 35: Financial Analysis Techniques-LOS e 习题精选 [打印本页]
作者: 1215    时间: 2011-3-16 16:27     标题: [2011]Session 8-Reading 35: Financial Analysis Techniques-LOS e 习题精选

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

LOS e: Demonstrate how ratios are related and how to evaluate a company using a combination of different ratios.

 

 

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

Balance Sheet

Assets Year 2006 Year 2007
Cash 200 450
Accounts Receivable 600 660
Inventory 500 550
Total CA 1300 1660
Plant, prop. equip 1000 1580
Total Assets 2600 3240
Liabilities
Accounts Payable 500 550
Long term debt 700 1052
Total liabilities 1200 1602
Equity
Common Stock 400 538
Retained Earnings 1000 1100
Total Liabilities & Equity 2600 3240

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

Which of the following is closest to the company's return on equity (ROE)?

A)
 0.29.
B)
 1.83.
C)
 0.62.

 

There are several ways to approach this question but the easiest way is to recognize that ROE = NI / average equity thus ROE = 944 / 1,519 = 0.622.

If using the traditional DuPont, ROE = (NI / Sales) × (Sales / Assets) × (Assets / Equity):

ROE = (944 / 3,000) × (3,000 / 2,920) × (2,920 / 1,519) = 0.622

The 5-part Dupont formula gives the same result:

ROE = (net income / EBT)(EBT / EBIT)(EBIT / revenue)(revenue / total assets)(total assets / total equity)

Where EBIT = EBT + interest = 1,349 + 151 = 1,500

ROE 2007 = (944 / 1,349)(1,349 / 1,500)(1,500 / 3,000)(3,000 / 2,920)(2,920 / 1,519) = 0.622

作者: 1215    时间: 2011-3-16 16:27

Income Statements for Royal, Inc. for the years ended December 31, 20X0 and December 31, 20X1 were as follows (in $ millions):

20X0

20X1

Sales

78 

82 

Cost of Goods Sold

(47)

(48)

  Gross Profit

31 

34 

Sales and Administration    

(13)

(14)

  Operating Profit (EBIT)

18 

20 

Interest Expense

(6)

(10)

  Earnings Before Taxes

12 

10 

Income Taxes

(5)

(4)

  Earnings after Taxes

  7 

  6 

Analysis of these statements for trends in operating profitability reveals that, with respect to Royal’s gross profit margin and net profit margin:

A)
 gross profit margin increased in 20X1 but net profit margin decreased.
B)
 gross profit margin decreased but net profit margin increased in 20X1.
C)
 both gross profit margin and net profit margin increased in 20X1.

Royal’s gross profit margin (gross profit / sales) was higher in 20X1 (34 / 82 = 41.5%) than in 20X0 (31 / 78 = 39.7%), but net profit margin (earnings after taxes / sales) declined from 7 / 78 = 9.0% in 20X0 to 6 / 82 = 7.3% in 20X1.

作者: 1215    时间: 2011-3-16 16:27

Selected financial information gathered from the Matador Corporation follows:

   

2007

2006

2005

Average debt

$792,000

$800,000

$820,000

Average equity

$215,000

$294,000

$364,000

Return on assets

5.9%

6.6%

7.2%

Quick ratio

0.3

0.5

0.6

Sales

$1,650,000

$1,452,000

$1,304,000

Cost of goods sold

$1,345,000

$1,176,000

$1,043,000

Using only the data presented, which of the following statements is most correct?

A)
 Return on equity has improved.
B)
 Leverage has declined.
C)
 Gross profit margin has improved.

Leverage increased as measured by the debt-to-equity ratio from 2.25 in 2005 to 3.68 in 2007. Gross profit margin declined from 20.0% in 2005 to 18.5% in 2007. Return on equity has improved since 2005. One measure of ROE is ROA × financial leverage. Financial leverage (assets / equity) can be derived by adding 1 to the debt-to-equity ratio. In 2005, ROE was 23.4% [7.2% ROA × (1 + 2.25 debt-to-equity)]. In 2007, ROE was 27.6% [5.9% ROA × (1 + 3.68 debt-to-equity)].

作者: 1215    时间: 2011-3-16 16:27

Assume that Q-Tell Incorporated is in the communications industry, which has an average receivables turnover ratio of 16 times. If the Q-Tell’s receivables turnover is less than that of the industry, Q-Tell’s average receivables collection period is most likely:

A)
 20 days.
B)
 12 days.
C)
 25 days.

Average receivables collection period = 365 / receivables turnover, which is 22.81 days for the industry (= 365 / 16). If Q-Tell’s receivables turnover is less than 16, its average days collection period must be greater that 22.81 days.

作者: 1215    时间: 2011-3-16 16:28

Comparative income statements for E Company and G Company for the year ended December 31 show the following (in $ millions):

E Company

G Company

Sales

70

90

Cost of Goods Sold

(30)

(40)

  Gross Profit

40

50

Sales and Administration

 (5)

(15)

Depreciation

 (5)

(10)

  Operating Profit

30

25

Interest Expense

(20)

 (5)

  Earnings Before Taxes

10

20

Income Taxes

 (4)

 (8)

  Earnings after Taxes

 6

12

The financial risk of E Company, as measured by the interest coverage ratio, is:

A)
 higher than G Company's because its interest coverage ratio is less than one-third of G Company's.
B)
 higher than G Company's because its interest coverage ratio is less than G Company's, but at least one-third of G Company's.
C)
 lower than G Company's because its interest coverage ratio is at least three times G Company's.

E Company’s interest coverage ratio (EBIT / interest expense) is (30 / 20) = 1.5.

G Company’s interest coverage ratio is (25 / 5) = 5.0. Higher interest coverage means greater ability to cover required interest and lease payments. Note that 1.5 / 5.0 = 0.30, which means the interest coverage for E Company is less than 1/3 that of G Company.





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