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 = … specify your
formula used

5)
What is the company’s Operating
Profit (EBIT) in 2014?

EBIT = … specify your formula used

6)
What was the company’s Pretax Income
in 2014? (EBT)

EBT = … specify your formula used

7)
How much Income Tax did they pay in
2014?

Income Tax = … specify your formula
used

8)
What was the company’s Net Income
After Tax in 2014?

NIAT = … specify your formula used

9)
What was the company’s NOPAT in
2014?

NOPAT = … specify your formula used

10)
What was the company’s Times
Interest Earned in 2014?

TIE = … specify your formula used

11)
What was the company’s Profit Margin
in 2014?

Profit Margin = … specify your
formula used

12)
What was the Company’s Return on
Assets in 2014 ?

ROA = … specify your formula used

13)
What was the company’s Return on
Equity in 2014?

ROE = … specify your formula used

14)
What is the company’s Current Ratio
in 2014?

Current Ratio = … specify your
formula used

15)
What is the company’s Quick Ratio in
2014?

Quick Ratio = … specify your formula
used

16)
What is the company’s Total Asset Turnover Ratio in 2014?

Total Asset Turnover = … specify
your formula used

17)
What is the company’s Inventory
Turnover Ratio in 2014?

Inventory Turnover = … specify your
formula used

18)
What is the company’s Day’s Sales
Outstanding (DSO) in 2014 assuming 365
days per year?

DSO = … specify your formula used

19)
What is the rate of the the company’s asset growth between 2013 and
2014?

Asset Growth = … specify your
formula used

20)
What is the rate of the company’s sales’ growth between 2013
and 2014?

Sales Growth = … specify your
formula used

21)
What were the company’s Net
Operating Working Capital in 2014?

NOWC = … specify your formula used

22)
What was the company’s Operating
Capital in 2014?

Operating Capital = … specify your
formula used

23)
What was the company’s Debt to
Equity Ratio in 2014?

Debt-to-Equity Ratio = … specify
your formula used

24)
What was the company’s Equity
Multiplier in 2014?

Equity Multiplier = … specify your
formula used

25)
What was the company’s Return on
Invested Capital (ROIC) in 2014?

ROIC = … specify your formula used

26)
What was the company’s Earnings Per
Share in 2014?

EPS = … specify your formula used

27)
What was the company’s
Price/Earnings Ratio in 2014?

PE Ratio = … specify your formula
used

28)
What was the company’s Dividend
Payout Ratio in 2014?

Dividend Payout Ratio = … specify
your formula used

29)
What were the Dividends Per Share
paid in 2014?

Dividend Per Share = … specify your
formula used

30)
What was the Dividend Yield in 2014?

Dividend Yield = … 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 …

-1
… 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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