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Financial Ratios

Explain the Capital Intensity Ratio

Explain why the following statement is False: If a company's capital intensity ratio (A*/S0) decreases as sales increase, use of the AFN formula is likely to understate the amount of additional funds required, other things held constant.

1 In the current economic environment, how can an accountant/auditor use financial ratios to determine the financial health of an organization? An accountant can use ratios to determine how much debt the company has compared to industry standards, the percentage of expenses to revenue, how solvent the company is, how liquid the company is. The auditor or accountant is looking for certain facts, including if the company were forced to close their doors tomorrow, how would the company handle their debts? How many assets can be turned into cash, to pay off creditors, to distribute to shareholders, etc. Financial ratios can also tell the auditor if the company can and should continue as a going concern - meaning, do they have enough money coming in to pay their bills, or are they starting to go under? 2 What ratios would be most appropriate to evaluate and why? Definitely the liquidity ratios, which show how liquid the company is. Liquidity is important because it shows how quickly a company can convert assets to cash. Profitability ratios are also a set of important ratios, because they show how profitable the company is, and the profitability is also compared against industry standards, which shows if the company is more or less profitable, in the current economic environment, when compared to other companies in the same industry.

1 In the current economic environment, how can an accountant/auditor use financial ratios to determine the financial health of an organization? An accountant can use ratios to determine how much debt the company has compared to industry standards, the percentage of expenses to revenue, how solvent the company is, how liquid

Contribution margin ratio and sales mix and break-even point

Real-World Focus In a recent report the Del Monte Foods Company reported three separate operating segments: consumer products (which includes a variety of canned foods including tuna, fruit, and vegetables); pet products (which includes pet food and snacks and vegetarian products); and soup and infant-feeding products (which in

Bernard Company Balance Sheets

Bernard Company Balance Sheets Assets 2012 2011 current Assets Cash $16,000 $12,000 marketable Secr. 20,000 6,000 acct. rec. (net) 54,000 46,000 inventories 135,000 143,000 prepaid items 25,000

Starbucks financial health: Using various ratios

Please help with the following problem. Discuss the trend for each ratio and what it tells you about the organization's financial health. Use Starbucks Corporation Fiscal 2009 & 2010 Annual Report.

Compute financial ratios for Donna Szabo Corporation

See attached file. Required: a. Compute or determine the following for the years 2003-2007. 1. Degree of financial leverage 2. Earnings per common share 3. Price/earnings ratio 4. Percentage of earnings retained 5. Dividend payout 6. Dividend yield 7. Book value per share 8. Materiality of options (use stock optio

Ratio Scenario - Supreme Variable Franistats - current ratio, asset turnover

Scenario: Chase, Dan, and I stopped by the old watering hole for an attitude adjustment. The conversation turned to work. Over the past year, SVF (Supreme Variable Franistats) has realized an increase in our current ratio and a drop in total assets turnover ratio. Conversely, SVF's sales, quick ratio, and fixed assets turnover r

Financial and Ratio Analysis for CanGo

See attached files. Assumptions: 1. At the beginning of 2009, CanGo purchased the online gaming company. This purchase was for cash, paid for through the proceeds of the IPO and results in goodwill. 2. 90% of the online book sales comes from JIT, the other 10% through the inventory which CanGo possesses. 10

Short term loans expected to be refinanced

The following information comes from the financial statements of Randall Stewart company: current assets 80,000 accounts payable 55,000 short term payable 65,000 long term debt 110,000 other long term liabilities 10000 total stockholders equity 180000 Randall has arranged with its bank t refinance its short ter


Ziebart Corp.'s EBITDA last year was $390,000 (= EBIT + depreciation + amortization), its interest charges were $9,500, it had to repay $26,000 of long-term debt, and it had to make a payment of $17,400 under a long-term lease. The firm had no amortization charges. What was the EBITDA coverage ratio?

Bennis Company - Ratio Analysis Example

E18-7 Bennis Company has the following comparative balance sheet data: Bennis Company Balance Sheet (Partial) December 31, 2010 2011 2012 Cash $15,000 $30,000 Receivables (net) 70,000 60,000 Inventories 60,000 50,000

Stock Dividend, Common Stock, and Dividend Payout Ratio

1. Heintz Corp. has just declared a 10% stock dividend. The company's pre-stock dividend common stockholders' equity was as follows: Common stock ($0.50 par, 10,000,000 shares) $5,000,000 Contributed capital in excess of par 48,000,000 Retained earnings 97,500,000 Total common stockholders'

Benefits of financial bubbles in commercialization of space

Are the 'bubbles' are such a bad thing? Maybe those investing are laying the foundations of what is still to be achieved - pioneers that do not make money out of it. NASA (i.e government) did some pioneering work and now the money is to be made by commercialization of space.

Applying the Regression Model

1. During its first year of operations, ABC Company paid $23,000 for direct materials and $18,500 for production workers' wages. Indirect manufacturing costs on the production facilities amounted to $16,500 while general, selling, and administrative expenses totaled $3,000. The company produced 16,000 units and sold 14,000 units

Compute the missing amount in the financial statement

The following information is provided in the 2011 annual report to shareholders of December 31, 2011 December 31, 2010 Accounts receivable ??? $100 million Inventory $70 million $30 million Other assets ??? $170 million Total assets ??? $300 million Total liabilities ??? $100 million Total stockhol

Hi/Low and Regression Forecasts with template

Please answer the attached questions, in a word document, using the attached excel template. Hi/Low and Regression Models: a. Complete the analysis (see Excel template) b. 1) Anne asked specifically about the revenue and volume levels necessary to produce an operating income of $55,000 which you identified as: ________

Comparative Ratio Analysis for Coca-Cola and PepsiCo

C11-11 Analytical case-comparative analysis of profitability and financial leverage measures The annual reports of the Coca-Cola Co. and PepsiCo, Inc., indicate the following for the year ended December 31, 2008 (amounts in millions): Coca-Cola Co. PepsiCo., Inc. Net revenues $31,994 $43,251 Net income 5,807 5,

P11-8 Tice Company ratios, journalize transactions

P11-8 Effect of transactions on liquidity measures Requirement 1: Calculate the working capital, current ratio, and acid-test ratio for Tice Company as of September 30, 2010. Requirement 2: Summarized here are the transactions/events that took place during the fiscal year ended September 30, 2011. 1. Credit sales for th

Break-Even Point questions for Flecker Vending and Morgan Tool

Using an Excel spreadsheet, complete Problems 1 & 2 below. Problem 1 - Flecker Vending Company Flecker Vending Company operates and services snack vending machines located in restaurants, gas stations, and factories in four northwestern states. The machines are rented from the manufacturer. In addition, Flecker must rent

Ratio Analysis Performance Terms

Base on the information provided (please see attachment), Please explain the company's performance in terms of its liquidity, debt and asset management, profitability, profitability, activity, and market value. What do the numbers say about the company and its past, present, and future potential? Use tables and graphs as appro

estimate the cost of equity

You need to estimate the equity cost of capital for XYZ Corp. You have the following data available regarding past returns: 2007 Risk free return 3% Market return 6% XYZ return 10% 2008 Risk free return 1% Market return -37% XYZ return -45% A) What was XYZ's average historical return? B) Compute the markets an

Break Even and More

"A couple of entrepreneurial business students at State University decided to put their education into practice by developing a tutoring company for business students. While private tutoring was offered, it was determined that group tutoring before tests in the large statistics classes would be most beneficial. The students rent