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    Calculate 13 financial ratios and 3 market value ratios

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    1. Calculating Ratios. Here are simplified financial statements of Phone Corporation from a recent
    year:
    INCOME STATEMENT

    Net sales 13,193
    Cost of goods sold 4,060
    Other expenses 4,049
    Depreciation 2,518
    Earnings before interest and taxes (EBIT) 2,566
    Interest expenses 685
    Income before tax 1,881
    Taxes 570
    Net income 1,311
    Dividends 856
    Nce
    (Figures in millions of dollars)
    End of Year Start of Year

    Assets:
    Cash and marketable securities 89 158
    Receivables 2,382 2,490
    Inventories 187 238
    Other current assets 867 932
    Total current assets 3,525 3,818
    Net property, plant, and equipment 19,973 19,915
    Other long-term assets 4,216 3,770
    Total assets 27,714 27,503
    Liabilities and shareholders' equity:
    Payables 2,564 3,040
    Short-term debt 1,419 1,573
    Other current liabilities 811 787
    Total current liabilities 4,794 5,400
    Long-term debt and leases 7,018 6,833
    Other long-term liabilities 6,178 6,149
    Shareholders' equity 9,724 9,121
    Total liab.& shareholders' equity 27,714 27,503

    1 Calculate the following financial ratios:
    a. Long-term debt ratio
    b. Total debt ratio
    c. Times interest earned
    d. Cash coverage ratio
    e. Current ratio
    f. Quick ratio
    g. Operating profit margin
    h. Inventory turnover
    i. Days in inventory
    j. Average collection period
    k. Return on equity
    l. Return on assets
    m. Payout ratio

    2. Market Value Ratios. If the market value of Phone Corp. stock was $17.2 billion at the end of
    the year, what was the market-to-book ratio? If there were 205 million shares outstanding, what
    were earnings per share? The price-earnings ratio?

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    Solution Summary

    The solution calculates 13 financial ratios and three market value ratios for a phone corporation.

    $2.19

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