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FIN 4200 1999 Annual Report

The document analyzes financial ratios for a company in 1999 based on its annual report. It calculates ratios to measure profitability, productivity, leverage, liquidity, and earnings. Compared to 1994, the company has significantly fewer employees and lower sales, indicating it has declined in size, though total assets remain similar. Some ratios changed while others stayed the same. The ratios suggest an overall decline for the company. A major difference is the company now has extremely low equity and high debt, negatively impacting its leverage ratios.

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Alex Nicholson
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68 views3 pages

FIN 4200 1999 Annual Report

The document analyzes financial ratios for a company in 1999 based on its annual report. It calculates ratios to measure profitability, productivity, leverage, liquidity, and earnings. Compared to 1994, the company has significantly fewer employees and lower sales, indicating it has declined in size, though total assets remain similar. Some ratios changed while others stayed the same. The ratios suggest an overall decline for the company. A major difference is the company now has extremely low equity and high debt, negatively impacting its leverage ratios.

Uploaded by

Alex Nicholson
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
You are on page 1/ 3

Alex Nicholson

Fin 4200
Professor. Jenkins
27 January 2020
1999 Annual Report

Part 1.

Financial Ratio Analysis

Profitability

 Gross Margin
o Gross Margin = (Sales - COGS) / Sales
o Gross Margin = (6426 - 2593) / 6246
o Gross Margin = 0.585
 Return on Sales
o ROS = NPAT / Sales
o ROS = 535 / 6246
o ROS = 0.086
 Return on Assets
o ROA = NPAT / Total Assets
o ROA = 535 / 4141
o ROA = 0.129
 Return on Equity
o ROE = NPAT / Stockholders Equity
o ROE = 535 / 164
o ROE = 3.26

Productivity

 Sales / No. of Employees


o 6246 / 10664
o = 0.586
 NPAT / No. of Employees
o 535 / 10644
o = 0.050
 Asset Turnover
o Average Turnover = Sales / Total Assets
o Asset Turnover = 6246 / 4141
o Asset Turnover = 1.51
Leverage

 Debt to Equity
o LTD + Current portion of LTD + Notes payable
o Funded debt = 1702.4 + 90.5 + 524.4 = 2317.3
o FD/Equity = 2,317.3 / 164.2
o Debt to Equity = 14.11
 Debt to Total Capital
o Debt to Total Capital = Funded Debt / (Funded Debt + Equity)
o Debt to Total Capital = 2317.3 / (2317.3 + 164.2)
o Debt to Total Capital = 0.93
 Times Interest Earned
o Times Interest Earned = EBIT / Interest Expense
o Times Interest Earned = (847 + 119.4) / 119.4 =
o Times Interest Earned = 8.09

Liquidity

 Current Ratio
o Current Ratio = Current Assets / Current Liabilities
o Current Ratio = 1102.5/1700.3
o Current Ratio = 0.65
 Quick Ratio
o Quick Ratio = Current Assets – Inventory / Current Liabilities
o Quick Ratio = (1102.5-426.7)/ 1700.3
o Quick Ratio = 0.397
 Working Capital Ratio
o Working Capital Ratio = (Current Assets - Current Liabilities) / Sales
o Working Capital Ratio = (1102.5-1700.3)/ 6426
o Working Capital Ratio = (0.09)
 Average Age of Receivables
o Average Age of Receivables = Receivables / Sales *360
o Average Age of Receivables = (490.6 / 6246) * 360
o Average Age of Receivables = 28.28
 Inventory Turnover
o = Inventory Turnover = COGS / Inventories
o = Inventory Turnover = 2593/ 426.7
o = Inventory Turnover = 6.08

 Earnings per Share


o NPAT / No. of shares common shares outstanding
o =3.49
How do they compare to 1994?
The size of the company has declined in size by a significant factor. Sales and number of
employees is an easy way to identify this reduction in magnitude. Total assets however remain
similar while a few of the ratios have changed some remain similar. The ratios lean towards the
company declining yet the earnings per share has increased.

What are the key differences?


One of the major differences is the now extremely low level of equity, this is the
ownership that the company has on itself. This has an extreme effect on the leverage ratios as
they now have far more debt than equity. This is a negative for the company.

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