## finance-Week3: Financial Statement Analysis Exercise PS: Guidance at bottom of this document

Week3: Financial

Statement Analysis Exercise

PS: Guidance at bottom of this document.

Instructions

1) Calculate the value or the ratio of

items in the

boxes

2) Show your

work by specifiying the formula you used for each of these calculations.

3) For $ values, no need to display any

decimals, e.g Gross Profit = $34,000.

4) For

unitless ratios and percentages, display 1 decimal place, e.g. TIE = 2.8; ROA

= 4.7%.

-1

-2

Suggestion: Calculate the subtotals (e.g. the current

assets) before going on to answer the individual questions.

Commonsize

Balance Sheet &

Income Statement

Big Apple Enterprises

2013

2014

2013

2014

Total Assets

62,000

72,000

100.00%

100.00%

Inventories

7,500

8,200

Receivables

21,000

21,000

Cash

4,500

6,000

Current Assets

Other Non-current Assets

10,500

11,300

Net Fixed Assets

18,500

25,500

Current Liabilities

19,000

14,000

Debt

23,000

28,000

Equity

20,000

30,000

Total Liabilities & Equity

Revenues

125,000

142,000

100.00%

100.00%

Cost of Goods Sold (COGS)

89,000

108,000

Gross Profit

SG&A

21,000

25,000

Operating Profit (EBIT)

Interest Expense

2,800

3,500

Earnings Before Taxes (EBT)

Taxes

Net Income After Tax (NIAT)

Other Information

Tax Rate

35%

35%

Number of Shares Outstanding

10,000

13,000

Common Dividends Paid

3,000

3,900

Share Price

$8.00

$7.50

2014 Summer2

For each of the calculations or

ratios below, indicate the formula that you are using to compute the quantum

as well as the numeric answer.

Year:

2014

3)

What is the company’s Gross Profit

in 2014?

e.g.

Gross Profit = Rev – COGS

34,000

4)

What is the company’s Gross Margin

in 2014?

Gross Margin = â¦ specify your

formula used

5)

What is the company’s Operating

Profit (EBIT) in 2014?

EBIT = â¦ specify your formula used

6)

What was the company’s Pretax Income

in 2014? (EBT)

EBT = â¦ specify your formula used

7)

How much Income Tax did they pay in

2014?

Income Tax = â¦ specify your formula

used

8)

What was the company’s Net Income

After Tax in 2014?

NIAT = â¦ specify your formula used

9)

What was the company’s NOPAT in

2014?

NOPAT = â¦ specify your formula used

10)

What was the company’s Times

Interest Earned in 2014?

TIE = â¦ specify your formula used

11)

What was the company’s Profit Margin

in 2014?

Profit Margin = â¦ specify your

formula used

12)

What was the Company’s Return on

Assets in 2014 ?

ROA = â¦ specify your formula used

13)

What was the company’s Return on

Equity in 2014?

ROE = â¦ specify your formula used

14)

What is the company’s Current Ratio

in 2014?

Current Ratio = â¦ specify your

formula used

15)

What is the company’s Quick Ratio in

2014?

Quick Ratio = â¦ specify your formula

used

16)

What is the company’s Total Asset Turnover Ratio in 2014?

Total Asset Turnover = â¦ specify

your formula used

17)

What is the company’s Inventory

Turnover Ratio in 2014?

Inventory Turnover = â¦ specify your

formula used

18)

What is the company’s Day’s Sales

Outstanding (DSO) in 2014 assuming 365

days per year?

DSO = â¦ specify your formula used

19)

What is the rate of the the company’s asset growth between 2013 and

2014?

Asset Growth = â¦ specify your

formula used

20)

What is the rate of the company’s sales’ growth between 2013

and 2014?

Sales Growth = â¦ specify your

formula used

21)

What were the company’s Net

Operating Working Capital in 2014?

NOWC = â¦ specify your formula used

22)

What was the company’s Operating

Capital in 2014?

Operating Capital = â¦ specify your

formula used

23)

What was the company’s Debt to

Equity Ratio in 2014?

Debt-to-Equity Ratio = â¦ specify

your formula used

24)

What was the company’s Equity

Multiplier in 2014?

Equity Multiplier = â¦ specify your

formula used

25)

What was the company’s Return on

Invested Capital (ROIC) in 2014?

ROIC = â¦ specify your formula used

26)

What was the company’s Earnings Per

Share in 2014?

EPS = â¦ specify your formula used

27)

What was the company’s

Price/Earnings Ratio in 2014?

PE Ratio = â¦ specify your formula

used

28)

What was the company’s Dividend

Payout Ratio in 2014?

Dividend Payout Ratio = â¦ specify

your formula used

29)

What were the Dividends Per Share

paid in 2014?

Dividend Per Share = â¦ specify your

formula used

30)

What was the Dividend Yield in 2014?

Dividend Yield = â¦ specify your

formula used

Guidance

Items highlighted in yellow are

intermediate calculations that could help you in calculating some of the

ratios.

0

Before you start Googling for any of

the required financial ratios to calculate the above,

please be aware that some financial

ratios have more than one variation. For example,

use of current accounting period’s

Total Assets vs. the Average of Total Assets of the

Beginning and the Ending Total Asset

of the accounting period. These variations have

valid rationale behind its use â¦

-1

â¦ but for consistency in grading

this Exercises as well as the Exam, we will adopt the

officieal ratios as is summarized in

Vol 1, pg 521 [2014-edition]; pg 591 [2013-edition].

-2

For ratios that are not listed on

above summary page, please check the textbook’s

Indexes at the back of Vol 2 pg 1089

& 1114 [2014-edition]; Vol 1 pg 736 [2013-edition].

-3

If you still have questions

regarding specific ratios, make an effort to attend the Live

Classroom. It is bound to be asked

by one of the students.

If you are unable to attend, the

session will be recorded for subsequent playback.

Revenue is also known as Sales.

Net Income in (8) is really Net

Income After Tax; also called Earnings.

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