Table 3.5 Short-term solvency,or liquidity,ratios Days sales in receivables- 365 days Current ratio Current assets Receivables turnover Current liabilities Total asset turnover Sales Quick ratio Current assets-Inventory Total assets Current liabilities Capital intensity Total assets Cash ratio Cash Sales Current liabilities IV. Profitability ratios II. Long-term solvency,or financial leverage,ratios Profit margin Net income Total debt ratio-Total assets-Total equity Sales Total assets Return on assets(ROA)= Net income Debt-equity ratio =Total debt/Total equity Total assets Equity multiplier Total assets/Total equity Return on equity (ROE)= Net income Times interest earned ratio= EBIT Total equity Interest RoE=Net income× Sales×Assets Sales Assets Cash coverage ratio= EBIT +Depreciation Equity Interest V. Market value ratios II. Asset utilization,or turnover,ratios Price-earnings ratio Price per share Inventory turnover= Cost of goods sold Earnings per share Inventory Market-to-book ratio Market value per share Days sales in inventory 365 days Book value per share Inventory turnover Receivables turnover Sales Accounts receivable 10
10 Table 3.5
Sample Balance Sheet Numbers in thousands Cash 680,623AVP 318,301 A/R 1,051,438N/P 4,613 Inventory 300,459 Other CL 1,645,748 Other CA 415,310 Total CL 1,968,662 Total CA 2,447,830 LT Debt 909,814 Net FA 3,415,159 CIS 2,984,513 Total Assets 5,862,989 Total Liab.Equity 5,862,989 11
11 Sample Balance Sheet Cash 680,623 A/P 318,301 A/R 1,051,438 N/P 4,613 Inventory 300,459 Other CL 1,645,748 Other CA 415,310 Total CL 1,968,662 Total CA 2,447,830 LT Debt 909,814 Net FA 3,415,159 C/S 2,984,513 Total Assets 5,862,989 Total Liab. & Equity 5,862,989 Numbers in thousands
Sample Income Statement Numbers in thousands,except EPS DPS Revenues 5,250,538 Cost of Goods Sold (2,046,645) Expenses (1,904,556) Depreciation Amortization (124,647) EBIT 1,174,690 Interest Expense (5,785) Taxable Income 1,168,905 Taxes (412,495) Net Income 756,410 EPS(193,000 shares outstanding) 3.92 Dividends per share 1.20 12
12 Sample Income Statement Revenues 5,250,538 - Cost of Goods Sold (2,046,645) - Expenses (1,904,556) - Depreciation & Amortization (124,647) EBIT 1,174,690 - Interest Expense (5,785) Taxable Income 1,168,905 - Taxes (412,495) Net Income 756,410 EPS (193,000 shares outstanding) 3.92 Dividends per share 1.20 Numbers in thousands, except EPS & DPS
Computing Liquidity Ratios Current Ratio CA/CL ▣2,447,830/1,968,662=1.24 times Quick Ratio =(CA-Inventory)/CL (2,447,830-300,459)/1,968,662=1.09 times Cash Ratio Cash CL 680,623/1,968,662=.346 times 13
13 Computing Liquidity Ratios n Current Ratio = CA / CL q 2,447,830 / 1,968,662 = 1.24 times n Quick Ratio = (CA – Inventory) / CL q (2,447,830 – 300,459) / 1,968,662 = 1.09 times n Cash Ratio = Cash / CL q 680,623 / 1,968,662 = .346 times
A1 Current ratio Helps assess the company's ability to pay its debts in the near future Current Assets Current ratio a Current Liabilities 用 14
14 Current Ratio Helps assess the company’s ability to pay its debts in the near future A1