Question

All ratios should use year-end totals and not averages and be compared to its industry average as well as time trend analysis. Calculate the ratios mentioned in the table below. For the turnover in days, assume 365 days. Also the debt ratio industry average given in the case is actually the liabilities-to-asset ratio. Hint: for Cash flow statement, you have to add back amortization to the Land, Plant, and Equipment item.

Ratios:

Current Ratio	Fixed Assets Turnover	Operating Profit Margin
Parts Inventory Turnover in Days	Total Assets Turnover	Net Profit Margin
WIP Inventory Turnover in Days	Liabilities-to-asset ratio	Return on Assets
FG Inventory Turnover in Days	Times Interest Earned	Return on Equity
A/R Turnover in Days	Gross Profit Margin

Income Statement

2005 2006 2007 2008 2009

Sales	2,142,659,000	5,413,625,000	8,671,715,000	12,175,476,500	13,664,714,160
Cost of Goods Sold	1,323,957,000	3,120,000,500	5,032,513,200	7,886,796,000	8,974,149,576
Gross Profit	818,702,000	2,293,624,500	3,639,201,800	4,288,680,500	4,690,564,584
Operating Costs
Selling and Distribution	212,340,640	545,980,400	854,300,000	934,532,230	1,001,234,530
R&D	93,640,450	220,340,340	365,660,340	476,350,230	785,774,340
Administration	95,003,300	405,340,300	832,740,300	999,453,230	980,340,500
Amortization	81,414,429	122,465,588	187,929,165	288,216,088	394,440,051
Operating Profit	336,303,182	999,497,873	1,398,571,995	1,590,128,722	1,528,775,163
Interest	53,251,456	145,434,234	288,898,584	277,686,944	329,923,700
Earnings Before Taxes	283,051,726	854,063,638	1,109,673,411	1,312,441,778	1,198,851,462
Taxes	99,068,104	298,922,273	388,385,694	459,354,622	419,598,012
Net Income	183,983,622	555,141,365	721,287,717	853,087,156	779,253,450

BALANCE SHEETS

	2005	2006	2007	2008	2009
Cash	310,630,300	790,419,373	1,437,227,573	1,366,526,361	1,413,474,400
A/R	316,972,950	758,988,750	1,201,094,250	1,328,523,975	1,503,560,340
Parts Inventory	253,578,360	607,191,000	960,875,400	1,062,819,180	1,201,345,530
WIP Inventory	26,789,180	45,354,460	66,650,675	75,640,210	89,575,400
Finished Goods Inventory	359,340,630	960,187,250	1,451,230,215	1,605,660,505	1,805,340,520
Total Current Assets	1,267,311,420	3,162,140,833	5,117,078,113	5,439,170,231	6,013,296,190
L,P,&E, Net	710,727,625	812,956,891	1,317,388,220	2,281,077,095	3,363,891,508
Intangibles	103,416,660	411,698,984	561,903,428	601,083,781	580,509,006
Total Assets	2,081,455,705	4,386,796,708	6,996,369,761	8,321,331,107	9,957,696,704
A/P	422,630,600	1,011,985,000	1,305,530,320	1,509,430,300	1,564,430,450
Current Portion of LT Debt	147,920,710	341,394,916	607,184,919	651,847,287	785,532,620
Total Current Liabilities	570,551,310	1,353,379,916	1,912,715,239	2,161,277,587	2,349,963,070
Long-term Debt	739,603,550	1,706,974,582	3,035,924,595	3,259,236,437	3,927,663,101
Shareholders’ Equity	771,300,845	1,326,442,210	2,047,729,927	2,900,817,082	3,680,070,533
Total Liabilities and Equities	2,081,455,705	4,386,796,708	6,996,369,761	8,321,331,107	9,957,696,704

SALES ANALYSIS

	2005	2006	2007	2008	2009
TV-LCD
Unit Price	$ 1,640	$ 1,485	$ 1,425	$ 1,250	$ 1,070
Unit Cost	$ 950	$ 835	$ 819	$ 810	$ 702
Quantity	250,000	2,620,000	4,889,600	8,560,300	11,230,388
TV-Plasma
Unit Price	$ 1,340	$ 1,100	$ 1,000	-	-
Unit Cost	$ 850	$ 700	$ 646	-	-
Quantity	1,080,000	830,000	530,400	-	-
DVD-HD
Unit Price	$ 250	$ 240	$ 225	$ 180	$ 140
Unit Cost	$ 145	$ 134	$ 125	$ 120	$ 112
Quantity	240,000	1,400,000	2,010,000	1,400,000	350,000
DVD-Blue Ray
Unit Price	-	-	$ 275	$ 220	$ 185
Unit Cost	-	-	$ 175	$ 161	$ 138
Quantity	-	-	330,000	1,580,000	2,890,000
Cable Sets
Unit Price	$ 105	$ 100	$ 100	$ 95	$ 95
Unit Cost	$ 45	$ 45	$ 43	$ 40	$ 41
Quantity	245,600	399,400	854,300	1,298,700	1,654,200
Home Theatre
Unit Price	$ 570	$ 570	$ 570	$ 550	$ 520
Unit Cost	$ 350	$ 355	$ 355	$ 350	$ 335
Quantity	350,300	410,500	956,500	1,367,500	1,745,000

Answer 1

Ratio	Calculation	2005	2006	2007	2008	2009
Current Ratio	Current Assets/Current Liabilities	2.22	2.34	2.68	2.52	2.56
Fixed Assets Turnover	Sales/Fixed Assets	3.01	6.66	6.58	5.34	4.06
Operating Profit Margin	Operating Profit/Sales	15.70%	18.46%	16.13%	13.06%	11.19%
Parts Inventory Turnover(days)	365/(Sales/Parts Inventory)	43.20	40.94	40.44	31.86	32.09
Total Assets Turnover	Sales/Total Assets	1.03	1.23	1.24	1.46	1.37
Net Profit Margin	Net Profit/Sales	8.59%	10.25%	8.32%	7.01%	5.70%
WIP Inventory Turnover in Days	365/(Sales/WIP Inventory)	4.56	3.06	2.81	2.27	2.39
Liabilities-to-assets ratio	(Current Liabilities+Long-Term Debt)/Total Assets	0.63	0.70	0.71	0.65	0.63
Return on Assets	Net income/Total Assets	8.84%	12.65%	10.31%	10.25%	7.83%
FG Inventory Turnover in Days	365/(Sales/Finished Goods Inventory)	61.21	64.74	61.08	48.13	48.22
Times Interest Earned	(Earnings before Taxes+Interest)/Interest	6.32	6.87	4.84	5.73	4.63
Return on Equity	Net Income/Shareholder's Equity	23.85%	41.85%	35.22%	29.41%	21.17%
A/R Turnover in Days	365/(Sales/ A/R )	54	51.17	50.56	39.83	40.16
Gross Profit Margin	Gross Profit/Sales	38.21%	42.37%	41.97%	35.22%	34.33%