Profitability Measures; Liquidity Measures; Activity Measures; Financial Leverage Measures; Physical Measures
Required:
a. Compute the following profitability measures for the year ended
December 29, 2001:
1. Return on investment, based on net income (perform a DuPont analysis).
2. Return on equity, based on net income.
3. Price/earnings ratio. Use $32.24 as the year-end market price.
4. Dividend yield.
5. Dividend payout ratio.
b. Compute the following liquidity measures at December 29, 2001:
1. Working capital.
2. Current ratio.
3. Acid-test ratio.
c. Compute the following activity measures for the year ended December 29,
2001:
1. Number of days' sales in accounts receivable, based on a 365-day year.
2. Number of days' sales in inventory, based on a 365-day year.
3. Accounts receivable turnover.
4. Inventory turnover.
5. Turnover of net property, plant, and equipment.
d. Compute the following financial leverage measures at December 29, 2001:
1. Debt ratio.
2. Debt/equity ratio.
3. Times interest earned.
e. Compute the following physical measures of Intel's profitability at
December 29, 2001:
1. Net revenues per employee.
2. Operating income per employee.
(Hint: The number of employees at year-end is disclosed on page 12 of the
Intel annual report in the Appendix.)
*See attachments for complete details.
Attachments
Solution Preview
Please refer to the attachment.
Ratio analysis-comprehensive problem, 2001 data. This problem is based on the 2001 annual report of Intel Corporation, in the Appendix.
(The 2001 Intel Annual Report can be found here: http://www.intel.com/intel/annual01/index.htm and the financials can be found here: http://www.intel.com/intel/annual01/01financials.pdf )
Required:
a. Compute the following profitability measures for the year ended
December 29, 2001:
1. Return on investment, based on net income (perform a DuPont analysis).
By DuPont analysis,
ROI = Net income/ Gross book value
= Net Income / (stockholders' equity + long-term debt)
= 1291/ (35830+1050) = 3.5%
2. Return on equity, based on net income.
ROI = Net income/ stockholders' equity = 1291/ 35830 = ...