# 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?

https://brainmass.com/business/finance/phone-corporation-calculate-13-financial-ratios-and-3-market-value-ratios-231876

#### Solution Summary

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