Financial information, Based on the financial information

Financial information

Assignment Help Financial Accounting

Reference no: EM13912661

Title: Calculating and Analyzing Ratios

Based on the financial information provided, calculate the following ratios and explain their purpose:

Current Ratio Inventory Turnover Ratio Accounts Receivable Turnover Ratio Debt to Equity Ratio Return on Assets Ratio Asset Turnover Ratio Return on Equity Ratio Profit Margin Ratio Price-Earnings Ratio Dividend Yield Ratio Note: When a balance sheet amount is related to an income statement amount in computing a ratio, the balance sheet amount should be an average of that period. The average is calculated by adding the ending balances of this year and last year and dividing the result by 2. Describe how a bank lending officer might use ratio analysis. Select five ratios that would be most useful for the purpose and explain the rationale for your selection.

	12/31/10	12/31/09
	Amount in Dollars	Amount in Dollars
Cash	200.00	150.00
Receivables	500.00	350.00
Inventories	750.00	755.00
Other Current Assets	100.00	75.00
Total Current Assets	1,550.00	1,330.00
Plant and Equipment	1,100.00	1,170.00
Other Long - Term Assets	150.00	100.00
Total Assets	2,800.00	2,600.00
Accounts Payable	510.00	400.00
Other Current Liabilities	25.00	25.00
Total Current Liabilities	535.00	425.00
Long Term Debt	375.00	400.00
Other Long Term Liabilities	225.00	175.00
Preferred Stock	250.00	250.00
Shareholders' Equity	1,415.00	1,350.00
Total Liabilities and Shareholders' Equity	2,800.00	2,600.00

	Year-2010	Year-2009
	Amount in Dollars
Net Sales	3500.00	3200.00
Cost of Goods Sold	2200.00	2100.00
Other Expenses	300.00	250.00
Depreciation	77.00	62.00
Interest Expenses	40.00	46.00
Tax	200.00	150.00
Net Income	683.00	592.00
Preferred Stock Dividend	25.00
Common Stock Dividends	260.00
Market Value of Equity	4000.00
Average Number of Shares	100.00
Share Price	40.00
Dividends per Share	2.60
Earnings per Share	6.58

Reference no: EM13912661

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