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Calculate 13 financial ratios and 3 market value ratios

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?

Solution Summary

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

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