Explore BrainMass
Share

Explore BrainMass

    IKEA Financial Statement Analysis: Liquidity & DuPont ratios

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    Compute the quick and current liquidity ratios, the DuPont ratio, profit margin, asset utilization, and financial leverage for IKEA.

    Write a paper discussing how differences in the industries (manufacturing, service, and retail sales) and different measurement conventions (IASB and FASB) affect the financial presentation of IKEA.

    © BrainMass Inc. brainmass.com October 10, 2019, 2:57 am ad1c9bdddf
    https://brainmass.com/business/financial-statements/ikea-financial-statement-analysis-liquidity-dupont-ratios-401299

    Solution Preview

    Get the answer with attachment.

    Answer:
    We have,
    Quick Ratio:
    Quick Ratio=(Current Asset-Inventories)/(Current Liabilities)
    Or,
    Quick Ratio (2010)=(€ 22,608-€ 3,415)/€12,811=1.50
    Current Ratio:
    Current Ratio=(Current Asset)/(Current Liabilities)
    Or,
    Current Ratio=(€ 22,608)/€12,811=1.76
    DuPont Ratio:
    ROE=(Net profit margin)* (Asset Turnover) * (Equity multiplier)
    Here,
    Net Profit Margin:
    Net Profit Margin=(Net Income)/Revenue
    Or,
    Net Profit Margin=(€ 2,688)/€23,539=0.1142=11.42%
    Asset Turnover:
    Asset Turnover=Revenue/(Total Asset)
    Or,
    Asset Turnover=€23,539/€41,273=0.57
    Equity Multiplier:
    Equity Multiplier=(Total Assets)/(Shareholder^' s Equity)
    Or,
    Equity Multiplier=€41,273/€22,841=1.81
    Hence,
    ROE=11.42%*0.57*1.81=0.1178=11.78%
    Asset Utilization Ratios:
    Asset utilization ratios include:
    Days sales inventory
    Days sales receivables
    Net working capital ...

    Solution Summary

    IKEA financial statement analysis for liquidity and DuPont ratios are examined.

    $2.19