You had answered my question on ratio analysis and this is the feed back i got back from the teacher. Please assist me here
Teacher's feedback below:
thanks for sending this to me. I did get a chance to take a look at things and have some questions.
For your long-term debt ratio in question 11, double-check your work. The formula us Long Term Debt / (Long Term Debt + Total Equity).
For your inventory turnover ratio in 12, the formula is sales/inventory. Please take another look.
For 14, net working capital please take another look at the numbers you put into the formula. They are off a bit.
16 - Return on Sales = Net Income/Sales.
For numbers 19 and 20, I know it said answer Y/N. I just want to make sure you know why this is the case. Are there particular things that made you believe this from the numbers you calculated in this assignment? If so, what are they specifically? Can you share that?
Madhu S Mahat
Ratio Analysis Assignment
Background information and questions for Assignment B
Rearrange this data into the Balance Sheet and P&L statement below.
Place the data into these financial statements:
Short Term Loan
Machinery & Equipment
Long Term Loan
Cost of Goods
Note for the financial statements below:
(The calculations that need to be made are noted in BOLD on the statements)
On the P&L Net Income must be calculated.
On the Balance Sheet Shareholders' Equity, Total Current Assets & Fixed Assets, Total Current
and Total Long Term Liabilities & Total Assets and Total Liabilities & Equity must be calculated.
Use these answers to complete Answer Sheet for Review Test B in the Item below.
You will also use these numbers to calculate the financial ratios in the online review
15,800 Liabilities &
Cost of Goods
Questions to answer (the same questions you will encounter when you open up your
Assignment Manager (for P&L) to turn it in)
Question 1 7 points
What is the value of NET INCOME?
Question 2 5 points
What is the value of CURRENT ASSETS?
Question 3 5 points
What is the value of FIXED ASSETS?
Question 4 5 points
What is the value of CURRENT LIABILITIES?
Question 5 5 points
What is the value of LONG TERM LIABILITIES?
Question 6 5 points
What is the value of SHAREHOLDERS' EQUITY?
Question 7 5 points
What is the value of TOTAL LIABILITIES & EQUITY?
Question 8 4 points
Using what you calculated so far what is the CURRENT RATIO?
Current ratio = Current Assets/Current Liabilities
=4,000/1,900 = 2.11
Question 9 4 points
What is the QUICK or ACID TEST RATIO?
Quick Ratio = (Cash+ Cash Equivalents+ Short-term investments)/ Current liabilities
= (2,000+500)/1,900 = 1.32
Question 10 4 points
What is the TOTAL DEBT RATIO?
Total Debt Ratio = Total Liabilities/Total Assets
Question 11 4 points
What is the LONG TERM DEBT RATIO?
Long term debt ratio = Long term liabilities/Total Assets
=5,100/15,800 = 0.32
Question 12 4 points
What is the INVENTORY TURNOVER RATIO?
Inventory turnover ratio = Cost of goods sold/ Inventory
Question 13 6 points
What are the DAYS OF SALES IN RECEIVABLES?
Days of sales in receivables = accounts receivable / average sales per day
Assumption: 365 Days in a year
=500/(3,000/365) = 60.83 Days
Question 14 4 points
What is the value of NET WORKING CAPITAL?
Working Capital = current assets (cash, inventory, a/r) - current liabilities (a/p, short term debt)
Net working capital is similar to working capital but removes the cash and debt consideration
and simplifies the formula to a/r and inventory minus a/p.
Net working capital = 500+1,500- 1,000 = 1,000
Question 15 4 points
What is TOTAL ASSET TURNOVER?
Total Asset Turnover = Sales/Total Assets
=3,000/15,800 = 0.1898/18.98%
Question 16 4 points
What is this firm's RETURN ON SALES (ROS)?
ROS = Operating Income/ Sales =
=720/3,000 = 0.24/24%
Question 17 4 points
What is the firm's RETURN ON ASSETS?
ROA = Net Income/Total Assets
=420/15,800 = 0.0266/2.66%
Question 18 4 points
What is this firm's RETURN ON EQUITY?
ROE= Net Income/ Shareholders Equity
=420/8,800 = 0.0477/4.77%
Question 19 9 points
As a result of your analyses do you believe this is a firm that will stay in business? Please look at
your results for all ratios in this case along with the ratio interpretation sheet I showed you in
class. Then, simply answer YES or NO.
Question 20 8 points
From the limited amount of data and analysis is this is a "reasonably well run company" that is
managing its finances well? Answer YES or NO
This question was answered on: Dec 18, 2020
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