Financial management with key ratio analysis

FINC 330 Graded Exercise 1 (Issued 06/02/08 due-06/08/08)

Using the attached Delta, Incorporated Financial Statements complete the following worksheet to provide the requested key financial ratios and information for FY 2008 - only. Type your work in the table provided, following the example given, and then rename this file (Prob1-xyz where xyz are your initials) and submit as a word attachment to your WebTycho Student Assignments - Graded Problem -1.

# Financial
Ratio Formula Computation Answer
Ex Current ratio
Current assets/Current Liabilities $1200/$300 4.0
1 Acid test ratio

2 Average collection
period

3 Operating profit margin

4 Inventory turnover

5 Return on common equity

6 Debt ratio

7 Times interest earned

Financial
Information Formula Computation Answer
8 Operating Income

9 Total liabilities

10 Net Working capital

Delta Incorporated
Balance Sheets
( $in 000's)
2007 2008

Cash $ 200 $ 150
Accounts receivable $ 450 $ 425
Inventories $ 550 $ 625
Total current assets $ 1,200 $ 1,200

Plant and equipment $ 2,200 $ 2,600
Less: Accumulated depreciation $ 1,000 $ 1,200
Net plant and equipment $ 1,200 $ 1,400
Total Assets $ 2,400 $ 2,600

Accounts Payable $ 200 $ 150
Notes payable-current (9%) $ - $ 150
Total current liabilities $ 200 $ 300
Bonds (8 1/3%) $ 600 $ 600
Common Stock $ 300 $ 300
Retained earnings $ 1,300 $ 1,400
Total Liabilities & Common Equity $ 2,400 $ 2,600

Delta Incorporated
Income Statements
( $in 000's)
2007 2008

Sales $ 1,200 * $ 1,450 *
Cost of Goods sold $ 700 $ 850
Gross margin $ 500 $ 600
Operating expense:
Selling expense $ 20 $ 25
General & administrative $ 10- $ 15
Depreciation $ 220 $ 200
Total operating expense $ 250 $ 240
Net Operating Income $ 250 $ 360
Interest expense $ 50 $ 64
Net Income before taxes $ 200 $ 296
Taxes (40%) $ 80 $ 118
Net Income $ 120 $ 178

* All sales are on account.

See the attached problem of financial information of Delta Incorporated with a table of key ratios to be completed.