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    Profitability Measures; Liquidity Measures; Activity Measures; Financial Leverage Measures; Physical Measures

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    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.

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    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 = ...

    $2.19

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