Question

In the Ratios tab of the FSAR Excel Spreadsheet, complete the Short-Term Debt Paying Ratios, Asset Utilization or Turnover Ratios, and the Long-Term Solvency or Financial Leverage sections. Calculate of the short-term debt paying ratios. Calculate the long-term debt paying or financial leverage ratios. Calculate the five significant asset utilization or turnover ratios.
Ratios							Comments
Liquidity Ratios	Company				Competitor	Industry
Short-Term Debt Paying Ratios	Year	Year	Year
Working Capital
Current Ratio
Acid Test Ratio
Cash Ratio
Long-Term Solvency or Financial Leverage
Times Interested Earned
Fixed Charge Coverage
Debt Ratio
Debt: Equity Ratio
Asset Utilization or Turnover Ratios
Inventory turnover
Days Sales in Inventory
Receivables Turnover
Days Sales in Receivables
Operating Cycle

Answer 1

As values are not mentioned,

1. The formula to calculate the short-term debt paying ratios are as follows:

a. Working capital = Current Assets - Current Liabilities

b. Current Ratio = Current Assets / Current Liabilities

c. Acid Test Ratio = Quick Assets / Current Liabilities
PS: Quick assets are all the current assets except prepaid expenses and stock

d. Cash Ratio = Cash and cash equivalents / Current Liabilities

2. The formula to calculate the financial leverage ratios are as follows:

a. Times Interested Earned = Earnings before interest and taxes / Interest Expenses

b. Fixed Charge Coverage = (Earnings before interest and taxes + Fixed charges before tax) / ( Fixed charges before tax + Interest)

c. Debt Ratio = Total debt/ Total assets

d. Debt Equity Ratio = Debt / Equity

3. The formula to calculate the turnover ratios are as follows:

a. Inventory turnover ratio = Sales/ Average Inventory

b. Days sales in inventory = Average Inventory x 365 / COGS

c. Receivable Turnover = Net Credit Sales / Average Accounts Receivable

d.  Days sales in receivable = Account Receivable x Number of days  / Total Credit Sales

e. Operating Cycle = Days sales in inventory + Days sales in receivable