Question

The balance sheet and income statement shown below are for Rex Inc. Note that the firm has no amortization charges, it does not lease any assets, none of its debt must be retired during the next 5 years, and the notes payable will remain the same.

Balance Sheet (Millions of $)
Assets	2012
Cash and securities	$ 1,554.0
Accounts receivable	9,660.0
Inventories	13,440.0
Total current assets	$24,654.0
Net plant and equipment	17,346.0
Total assets	$42,000.0
Liabilities and Equity
Accounts payable	$ 7,980.0
Notes payable	5,880.0
Accruals	4,620.0
Total current liabilities	$18,480.0
Long-term bonds	10,920.0
Total debt	$29,400.0
Common stock	3,360.0
Retained earnings	9,240.0
Total common equity	$12,600.0
Total liabilities and equity	$42,000.0
Income Statement (Millions of $)	2012
Net sales	$58,800.0
Operating costs except depr'n	$54,978.0
Depreciation	$ 1,029.0
Earnings bef int and taxes (EBIT)	$ 2,793.0
Less interest	1,050.0
Earnings before taxes (EBT)	$ 1,743.0
Taxes	$     610.1
Net income	$ 1,133.0
Other data:
Shares outstanding (millions)	175.00
Common dividends	$   509.83
Int rate on notes payable & L-T bonds	6.25%
Federal plus state income tax rate	35%
Year-end stock price	$77.69

Now answer the following:

1. What is the firm's current ratio?
2. What is the firm's quick ratio?
3. What is the firm's days sales outstanding? Assume a 360-day year for this calculation.
4. What is the firm's total assets turnover?
5. What is the firm's inventory turnover ratio?
6. What is the firms's TIE?
7. What is the firm's EBITDA coverage?
8. What is the firm's Debt to assets ratio.
9. What is the firm's ROA?
10. What is the firm's ROE?
11. What is the firm's profit margin?
12. What is the firm's dividends per share?
13. What is the firm's cash flow per share?
14. What is the firm's EPS?
15. What is the firm's P/E ratio?
16. What is the firm's equity multiplier?
17. What is the firm's book value per share?

Answer 1

1. What is the firm's current ratio? = Current Assets/Current Liabilities = 24,654/18,480 = 1.3341
2. What is the firm's quick ratio? = Quick Assets/Current Liabilities = (Cash and Securities + Accounts Receivable)/Current Liabilities = (1,554+9,660)/18,480 = 0.6068
3. What is the firm's days sales outstanding? Assume a 360-day year for this calculation. = Average Accounts Receivable/Total sales * No of days = 9,660/58,800*360 = 59.1428 days
4. What is the firm's total assets turnover? = Net Sales/ Average Total Assets = 58,800/42,000 = 1.4
5. What is the firm's inventory turnover ratio? = Cost of Goods sold/Average Inventory = 54,978/13,440 = 4.0906
6. What is the firms's TIE? = EBIT/Interest Expense = 2,793/1,050 = 2.66
7. What is the firm's EBITDA coverage? = EBITDA/Interest + Principal = (58,800-54,978)/(29400+1050) = 3,822/30,450 = 0.1255
8. What is the firm's Debt to assets ratio. = Total Debt/Total Assets = 29,400/42,000 = 0.7
9. What is the firm's ROA? = Net Income/Average Total Assets = 1,133/42,000 = 0.02698
10. What is the firm's ROE? = Net Income/ Average Shareholders Equity = 1,133/12,600 = 0.09
11. What is the firm's profit margin? = Net Income/Net Sales = 1,133/58,800 = 2%
12. What is the firm's dividends per share? = Dividend/No of shares = 509.83/175 = 2.9133
13. What is the firm's cash flow per share? = Cash flow/No of shares = 1,554/175 = 8.88
14. What is the firm's EPS? = Net Income/No of shares = 1,133/175 = 6.4743
15. What is the firm's P/E ratio? = Market price per share/Earnings per share = 77.69/6.4743 = 12
16. What is the firm's equity multiplier? = Total Assets/Total Equity = 42,000/12,600 = 3.33
17. What is the firm's book value per share? = (Total Shareholder Equity - Preferred Equity)/No of shares = 12,600/175 = 72