Answers to Questions from Worksheet 2
Question 8
Chonixx’s 2010 Income Statement is as follows:
419519
Sales 7
267312
COGS 9
155206
Gross Profit 8
Selling and Admin. Expenses 465831
Depreciation expense 160119
EBIT 896118
Interest Expense 17849
Income Taxes 298052
Net Income 580217
Chonixx’s 2010 Annual Balance Sheets as follows
ASSETS $ LIABILITIES AD EQUITIES $
Cash and Equivalents 795728 LIABILITIES
Accounts Receivables 964465 Accounts Payables 382579
Inventories 218156 Accrued Expenses 226977
Other Current Assets 88237 Income taxes payable 67886
Total Current Assets 2006256 Short term notes 189024
Other interest bearing current
Gross Plant & Equipment 2006256 liabilities 123586
Accumulated Depreciation 973660 Total Current Liabilities 990052
Net Plant & equipment 1032596 Long-term debt 638250
Other Assets 762035 Total liabilities 1628302
Total Assets 3861217
COMMO EQUITY
Common Stock (par value) 3254
Paid in Capital 386284
Retained Earnings 2323737
Less Treasury Stock (482360)
Total common Equity 2232915
Total liabilities and equity 3861217
, (a) Calculate the following financial Ratios [9]
PEER GROUP
• Current Ratio 1.5 times
• Average Collection period 75days
• Accounts Receivables turnover 4.87times/year
• Inventory turnover 5.79times/year
• Operating Income Return on Investment 9.8%
• Operating Profit Margin 8.3%
• Total Asset Turn over 1.18times
• Debt Ratio 58%
• Times Interest earned 3.93times
Current ratio = Current assets /Current liabilities
2067M/990M
= 2.09 times
Acid Test Ratio = Current assets - Inventories
Current liabilities
2067- 218 M
990M
Average Collection Period:
= Accounts Receivables x 365
Credit Sales
964M/4195M x 365
= 83.9 days
Accounts Receivables Turnover Ratio
Credit Sales / Accounts Receivables
4195M / 964 M
= 4.35 times /year
Inventory Turnover Ratio
= Cost of Goods Sold
Inventory
2167 M / 218 M
= 12.26 times /year
Operating Income return on Investment
= Operating Income
Total Assets
896 M / 3861 M
= .232 or 23.2%
Question 8
Chonixx’s 2010 Income Statement is as follows:
419519
Sales 7
267312
COGS 9
155206
Gross Profit 8
Selling and Admin. Expenses 465831
Depreciation expense 160119
EBIT 896118
Interest Expense 17849
Income Taxes 298052
Net Income 580217
Chonixx’s 2010 Annual Balance Sheets as follows
ASSETS $ LIABILITIES AD EQUITIES $
Cash and Equivalents 795728 LIABILITIES
Accounts Receivables 964465 Accounts Payables 382579
Inventories 218156 Accrued Expenses 226977
Other Current Assets 88237 Income taxes payable 67886
Total Current Assets 2006256 Short term notes 189024
Other interest bearing current
Gross Plant & Equipment 2006256 liabilities 123586
Accumulated Depreciation 973660 Total Current Liabilities 990052
Net Plant & equipment 1032596 Long-term debt 638250
Other Assets 762035 Total liabilities 1628302
Total Assets 3861217
COMMO EQUITY
Common Stock (par value) 3254
Paid in Capital 386284
Retained Earnings 2323737
Less Treasury Stock (482360)
Total common Equity 2232915
Total liabilities and equity 3861217
, (a) Calculate the following financial Ratios [9]
PEER GROUP
• Current Ratio 1.5 times
• Average Collection period 75days
• Accounts Receivables turnover 4.87times/year
• Inventory turnover 5.79times/year
• Operating Income Return on Investment 9.8%
• Operating Profit Margin 8.3%
• Total Asset Turn over 1.18times
• Debt Ratio 58%
• Times Interest earned 3.93times
Current ratio = Current assets /Current liabilities
2067M/990M
= 2.09 times
Acid Test Ratio = Current assets - Inventories
Current liabilities
2067- 218 M
990M
Average Collection Period:
= Accounts Receivables x 365
Credit Sales
964M/4195M x 365
= 83.9 days
Accounts Receivables Turnover Ratio
Credit Sales / Accounts Receivables
4195M / 964 M
= 4.35 times /year
Inventory Turnover Ratio
= Cost of Goods Sold
Inventory
2167 M / 218 M
= 12.26 times /year
Operating Income return on Investment
= Operating Income
Total Assets
896 M / 3861 M
= .232 or 23.2%
