Financial Reporting, Financial Statement Analysis and Valuation
8th Edition
ISBN: 9781285190907
Author: James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher: Cengage Learning
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Textbook Question
Chapter 5, Problem 15PC
Refer to the profitability ratios of Coca-Cola in Problem 4.26 in Chapter 4. Exhibit 5.17 presents risk ratios for Coca-Cola for 2006–2008. As we did within the chapter for PepsiCo, we utilize Coca-Cola’s footnote disclosures to extract the amount of trade accounts payable included within the line item accounts payable and accrued expenses.
Exhibit 5.17
REQUIRED
- a. Assess the changes in the short-term liquidity risk of Coca-Cola between 2006 and 2008.
- b. Assess the changes in the long-term solvency risk of Coca-Cola between 2006 and 2008.
- c. Compare the short-term liquidity ratios of Coca-Cola with those of PepsiCo discussed in the chapter. Which firm appears to have more short-term liquidity risk? Explain.
- d. Compare the long-term solvency ratios of Coca-Cola with those of PepsiCo discussed in the chapter. Which firm appears to have more long-term solvency risk? Explain.
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The new owners of Pak. Electric Co. have hired you to help them diagnose and cure problems that the company has had in maintaining adequate liquidity. As a first step, you perform a liquidity analysis. You then do an analysis of the company’s short-term activity ratios. Your calculations and appropriate industry norms are listed.RatiosCurrent RatioPak. Electric Co. 4.5Industry Average 4.0Quick RatioPak. Electric Co. 2.0Industry Average 3.1Inventory TurnoverPak. Electric Co. 6.0Industry Average 10.4Average Collection PeriodPak. Electric Co. 73 daysIndustry Average 52 daysAverage Payment PeriodPak. Electric Co. 31 days40 daysa. What recommendations relative to the amount and the handling of inventory could you make to the new owners?b. What recommendations relative to the amount and the handling of accounts receivable could you make to the new owners?
Need all the required, please and thank you ! very important
You are provided with the Income Statement and the Balance Sheet of HTS software, Inc. for 2011.
Required:
(b) Analyze the current financial position for the company from a time series and cross section viewpoint.
(c) Break your analysis into an evaluation of the firm’s liquidity, activity, debt, profitability and market ratios.
Historical and Industry Average Ratios
HTS Software , Inc.
Ratio
2010
2011
Industry2011
Current Ratio
2.6
2.08
2.7
Quick Ratio
1.8
1.32
1.75
Inventory Turnover
4.5
6
4.7
Average Collection Period
40days
9.125
42 days
Total Asset Turnover
1.2
1.69
1
Debt Ratio
20%
28.2%
21%
Times Interest Earned
9
5.9%
8.9
Gross Profit Margin
43%
42.8%
44%
Operating Profit Margin
30%
25.5%
32%
Net Profit Margin
20%
17%
21%
Return on total assets
12%
4.11%
13%
Return on Equity
Price/Earnings Ratio
15%
7.3
19%
4.4
16%
8…
Chapter 5 Solutions
Financial Reporting, Financial Statement Analysis and Valuation
Ch. 5 - Prob. 1QECh. 5 - Prob. 2QECh. 5 - A firm has experienced an increasing current ratio...Ch. 5 - A firm has experienced a decrease in its current...Ch. 5 - Prob. 5QECh. 5 - A firm had the following values for the four debt...Ch. 5 - Prob. 7QECh. 5 - Prob. 8QECh. 5 - Prob. 9QECh. 5 - Prob. 10QE
Ch. 5 - Market equity beta measures the covariability of a...Ch. 5 - Altmans bankruptcy risk model utilizes the values...Ch. 5 - Calculating and Interpreting Risk Ratios. Refer to...Ch. 5 - Refer to the financial state-ment data for...Ch. 5 - Refer to the profitability ratios of Coca-Cola in...Ch. 5 - Delta Air Lines, Inc., is one of the largest...Ch. 5 - Prob. 17PCCh. 5 - Prob. 18PCCh. 5 - Prob. 19PCCh. 5 - Prob. 20PCCh. 5 - Prob. 21PCCh. 5 - Prob. 22PCCh. 5 - Compute the values of each of the ratios in...
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