Ratio analysis—comprehensive problem, 2011 data This problem is based on the 2011 annual report of Campbell Soup Company in the appendix.
a. Compute the following profitability measures for the year ended July 31, 2011:
1. Return on investment, based on net earnings (perform a DuPont analysis).
2. Return on equity, based on net earnings and total equity.
3. Price/earnings ratio. Use $33.05 as the year-end market price.
4. Dividend yield.
5. Dividend payout ratio.
b. Compute the following liquidity measures at July 31, 2011:
1. Working capital.
2. Current ratio.
3. Acid-test ratio.
c. Compute the following activity measures for the year ended July 31, 2011:
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 July 31, 2011:
1. Debt ratio.
2. Debt/equity ratio.
e. Compute the following physical measures of Campbell's profitability at July 31, 2011:
1. Net sales per employee.
2. Operating income per employee. (Note: In a page not reproduced in the appendix, Campbell's 2011 annual report disclosed that on July 31, 2011, the company had approximately 17,500 employees.)
Your ratios are shown in excel, with numerator and denominator as well as the computation revealed for your study.