Question

Please find the financial statements below and find the ratios indicated:

Balance Sheet (Figures in $ millions) ASSETS 2019 2018 Current Assets: Cash & marketable securities $    3,230 $   2,400 Accounts receivable $    2,500 $   1,400 Inventories $ 12,060 $ 10,710 Other current assets $    1,050 $       750 Total current assets $ 18,840 $ 15,260 Fixed Assets: Tangible fixed assets Property, plant, & equipment $ 43,064 $ 38,490 Less Accumulated depreciation $ 15,716 $ 14,420 Net Tangible fixed assets $ 27,348 $ 24,070 Long-term investments $    1,590 $   1,270 Other long-term assets $       750 $       564 Total Assets $ 48,528 $ 41,164 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Debt due to repayment $       187 $   1,320 Accounts payable $    7,570 $   8,870 Other current liabilities $    1,430 $   1,270 Total current liabilities $    9,187 $ 11,460 Long-term debt $ 14,692 $   9,470 deferred income taxes $       514 $       310 Other long-term liabilities $    2,042 $   2,050 Total liabilities $ 26,435 $ 23,290 Common stock + other paid-in capital $    8,536 $   8,530 Retained earnings and treasury stock $ 13,557 $   9,344 Total shareholders' equity $ 22,093 $ 17,874 Total liabilities + shareholders' equity $ 48,528 $ 41,164

$ millions Net Sales $ 80,810 Less Cost of goods sold $ 50,420 Less SG& Admin expenses $ 17,580 Less Depreciation $ 1,296 EBIT $ 11,514 Less Interest expense $ 711 Taxable income $ 10,803 Less Tax $ 3,781 Net income $ 7,022 Dividends $ 2,809 Addition to retained earnings $ 4,213 Also given: At close of fiscal 2019 company's : # of shares outstanding 1,800 million common stock price $60 Cost of capital (calculated) 11% Tax rate 40% Please find out the following for the most recent year: EVA _______________ MVA _______________ Market-to-book ratio_______________ Inventory Turnover (days) ____________ Receivable Turnover (days) __________ ROE _______________ ROC _______________ ROA _______________ Profit margin _______________ Long-term debt ratio _______________

Answer 1

1. EVA _______________
2. MVA _______________
3. Market-to-book ratio_______________
4. Inventory Turnover (days) ____________
5. Receivable Turnover (days) __________
6. ROE _______________
7. ROC _______________
8. ROA _______________
9. Profit margin _______________
10. Long-term debt ratio _______________

1. EVA = NOPAT - (Total Assets - Current Liabilities) * WACC

NOPAT = EBIT*(1-Tax) = 11,514 * (1-0.40) = 6,908.40

=> EVA = 6,908.40 - (48,528 - 9,187) *11%

= $ 2,580.89

2. MVA = Market Value of Shares – Book Value of Shareholders’ Equity

MVA = ( # of shares outstanding * common stock price - Book Value of Shareholders’ Equity)

MVA = (1800m shares* $60) - $ 22,093 = $85,907

3. Market-to-book ratio = Market Capitalization / Net Book Value

where Net Book value = Total assets - Total liabilities

NBV = 48,528 - $26,435 = 22,093

Market to book ratio = (1800m shares* $60) / 22,093 = 4.89x

4. Inventory turnover days = [(Average Inventory)/COGS]*365

= [((12,060 + 10,710)/2)/50,420]*365 = 82.418 days

5. Receivables turnover (days) = (Average Accounts receivable/Net credit sales)*365

assuming all sales is Credit sales,

Receivables turnover= (((2,500 + 1400) / 2)/80,810)*365 =8.8076 days

6. ROE = Net income/Total shareholder's equity

= 7022/22093 = 31.783%

7. ROC = (Net income-dividends)/(Total Debt + Equity) (*Total debt = long term debt + debt due to repayment)

= (7022-2809)/(22093+(14692+187)) = 0.11395

8. ROA = Net income/(Average total assets)

= 7022/(48528+41164)

= 0.1565

9. Profit Margin = Net income/Total revenue

= 7022/80,810

=8.689%

10. Long term debt ratio = Long term debt/ total asset

= 14,692/48528

= 0.3027