AFM101 Lecture Notes - Lecture 1: Asset
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Related Questions
E13-5 Matching Each Ratio with Its Computational Formula LO 13-4, 13-5, 13-6, 13-7 | |||||||
Match each definition with its related ratios or percentages by selecting the appropriate letter in the drop down provided. | |||||||
Definitions: | Ratios or Percentages | Definitions | |||||
A. | Net Income (before extraordinary items) ÷ Net Sales | 1 | Profit margin | ||||
B. | Days in Year ÷ Receivable Turnover ratio | 2 | Inventory turnover ratio | ||||
C. | Net Income ÷ Average Stockholdersâ Equity | 3 | Average collection period | ||||
D. | Net Income ÷ Average Number of Shares of Common Stock Outstanding | 4 | Dividend yield ratio | ||||
E. | Return on Equity â Return on Assets | 5 | Return on equity | ||||
F. | Quick Assets ÷ Current Liabilities | 6 | Current ratio | ||||
G. | Current Assets ÷ Current Liabilities | 7 | Debt-to-equity ratio | ||||
H. | Cost of Goods Sold ÷ Average Inventory | 8 | Price/earnings ratio | ||||
I. | Net Credit Sales ÷ Average Net Receivables | 9 | Financial leverage percentage | E | |||
J. | Days in Year ÷ Inventory Turnover Ratio | 10 | Receivable turnover ratio | ||||
K. | Total Liabilities ÷ Stockholdersâ Equity | 11 | Average daysâ supply of inventory | ||||
L. | Dividends per Share ÷ Market Price per Share | 12 | Earnings per share | ||||
M. | Market Price per Share ÷ Earnings per Share | 13 | Return on assets | ||||
N. | [Net Income + Interest Expense (net of tax)] ÷ Average Total Assets | 14 | Quick ratio | ||||
O. | Cash from Operating Activities (before interest and taxes) ÷ Interest Paid | 15 | Times interest earned | ||||
P. | Net Sales Revenue ÷ Net Fixed Assets | 16 | Cash coverage ratio | ||||
Q. | (Net Income + Interest Expense + Income Tax Expense) ÷ Interest Expense | 17 | Fixed asset turnover ratio | ||||
Millions of USD (except for per share items) | 2015 | 2014 | |
Sales | $ 114,826 | $ 114,960 | |
Cost of Goods Sold | 86,483 | 86,714 | |
Gross Profit | 28,343 | 28,246 | |
Selling/General/Admin. Expenses, Total | 22,663 | 22,053 | |
Operating Income | 5,680 | 6,193 | |
Interrest and Taxes | 2,336 | 2,600 | |
Net Income | $ 3,344 | $ 3,593 | |
Market Price/Share | $ 65.68 | $ 84.26 | |
Shares Outstanding | 3,210 | 3,210 |
Millions of USD (except for per share items) | As of 2015 | As of 2014 |
Cash & Equivalents | $ 7,759 | $ 6,012 |
Total Receivables, Net | 5,813 | 6,096 |
Total Inventory | 46,310 | 45,315 |
Prepaid Expenses | 2,251 | 1,811 |
Total Current Assets | 62,133 | 59,687 |
Property/Plant/Equipment, Total - Gross | 138,614 | 142,830 |
Total Assets | $ 200,747 | $ 202,517 |
Accounts Payable | 37,224 | 36,347 |
Accrued Expenses | 18,685 | 17,807 |
Notes Payable/Short Term Debt | 799 | 3,517 |
Current Port. of LT Debt/Capital Leases | 6,468 | 3,566 |
Other Current liabilities, Total | 6,448 | 6,684 |
Total Current Liabilities | 69,624 | 67,921 |
Total Long Term Debt | 42,964 | 48,233 |
Deferred Income Tax | 8,169 | 8,164 |
Minority Interest | 3,416 | 5,111 |
Total Liabilities | 124,173 | 129,429 |
Total Equity | 76,574 | 73,088 |
Total Liabilities & Shareholders' Equity | 200,747 | 202,517 |
- | - | |
Total # Common Shares Outstanding | $ 3,227 | $ 3,230 |
Category | Two Ratios from Each Category | Ratio | Formula | 2015 | 2014 | |
Liquidity | Current and Quick Ratio | Current | Current Assests/Current Liabilites | |||
Quick | (CA - Inventories)/Current Liabilites | |||||
Asset Management | Total Assets Turnover, Total Fixed Asset Turnover | Total Assets Turnover, | Sales/Total Assets | |||
Total Fixed Asset Turnover | Sales/Total Fixed Assets | |||||
Debt Management | Debt to Assets and Debt to Equity | Debt to Assets | Total Liabilities / Total Assests | |||
Debt to Equity | Total Liabilities / Common Stockholders Equity | |||||
Profitability Ratio | Return on Assets and Return on Equity | Return on Assets | Net Income/Total Assets | |||
Return on Equity | Net Income/Common Equity | |||||
Market Ratio | Earnings Per Share and Price to Earnings Ratio | Earnings Per Share | Net Income / Common Shares Outstanding | |||
Price to Earnings Ratio | Market Price of Shares/Earning Per Share |
Required - Using the attached- below- financial statements for Coca-Cola calculate the following ratios for 2014 - Hint: use excel to set up the formulas and amounts to calculate (see below chart)
https://www.sec.gov/Archives/edgar/data/21344/000002134415000005/a2014123110-k.htm
Liquidity ratio | |
Current assets | 92023 |
Current liabilities | 32374 |
Current ratio is current asset/current liabilities | 92023/32374= 2.84 |
Quick assets=current assets- inventory + prepaid expenses | 92023-3100+3066= 91989 |
Quick ratio is quick assets/current liabilities | 91989/32374= 2.84 |
Calculate debt to equity ratio= Total liabilities/ total stockholder equity | |
Times interest earned= Earnings before interest and taxes (EBIT)/interest expense | |
Return on Net Operating Assets â RNOA Net Operating assets RNOA= NPOAT/Average NOA | |
Net Operating Profit After Taxes â NOPAT Net operating profit after taxes= net income- (nonperatinge revenues-nonoperating expenses)x(1-marginal tax rates) | |
Net Operating Profit Margin â NOPM NPOM= NOPAT/Sales Revenue | |
Net Operating Asset Turnover â NOAT NOAT= Sales/Average NOA |
Note 1 | Coca-Cola | ||||
Operating Assets | |||||
Total assets - Non-operating assets | |||||
(ie NOA = Total assets less Short-term investments + Other investments | |||||
Operating Liabilities | |||||
Total liabilities - Non-operating liabilities | |||||
ie NOL = Total liabilities - Loans and notes payable + Current maturities of long-term debt+Long-term debt) |