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th 9 ©The McGraw-Hill Companies, Inc. 2000 Foundations of Financial Management E D I T I O N N I N T H Irwin/McGraw-Hill Block Hirt MANAJEMEN KEUANGAN Wardoyo WA +6281212326808 FB: Wardoyo HP

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th 9 ©The McGraw-Hill Companies, Inc. 2000 Foundations of Financial Management E D I T I O N N I N T H Irwin/McGraw-Hill Block Hirt

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th 9 ©The McGraw-Hill Companies, Inc. 2000 Foundations of Financial Management E D I T I O N N I N T H Irwin/McGraw-Hill Block Hirt Saxton Company Industry Average 1. Profit margin = = 5%6.7% 2. Return on assets (investment) = a. = 12.5% 10% b. 5% 2.5 = 12.5% 6.7% 1.5 = 10% 3. Return on equity = a. = 20%15% b. = 20% = 15% Net income sales $200,000 $4,000,000 Net income Total assets Net income Sales Total assets $200,000 $1,600,000 Net income Stockholders’ equity $200,000 $1,000,000 Return on assets (investment) (1 – Debt/Assets) 0.125 1 – 0.375 0.10 1 – 0.33 T 3-3 Profitability Ratios

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th 9 ©The McGraw-Hill Companies, Inc. 2000 Foundations of Financial Management E D I T I O N N I N T H Irwin/McGraw-Hill Block Hirt Saxton Company Industry Average 4. Receivables turnover = = 11.410 times 5. Average collection period = = 32 36 days 6. Inventory turnover = = 10.87 times Sales (credit) Receivables $4,000,000 $350,000 Accounts receivable Average daily credit sales $350,000 $11,111 Sales Inventory $4,000,000 $370,000 T 3-6 Asset Utilization Ratios

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th 9 ©The McGraw-Hill Companies, Inc. 2000 Foundations of Financial Management E D I T I O N N I N T H Irwin/McGraw-Hill Block Hirt Asset Utilization Ratios Saxton Company Industry Average 7. Fixed asset turnover = = 55.4 times 8. Total asset turnover = = 2.5 1.5 times Sales Fixed assets $4,000,000 $800,000 Sales Total assets $4,000,000 $1,600,000 T 3-6

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th 9 ©The McGraw-Hill Companies, Inc. 2000 Foundations of Financial Management E D I T I O N N I N T H Irwin/McGraw-Hill Block Hirt Liquidity Ratios Saxton Company Industry Average 9. Current ratio = = 2.672.1 10. Quick ratio = = 1.43 1.0 Current assets Current liabilities $800,000 $300,000 Current assets – Inventory Current liabilities $430,000 $300,000 T 3-7

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th 9 ©The McGraw-Hill Companies, Inc. 2000 Foundations of Financial Management E D I T I O N N I N T H Irwin/McGraw-Hill Block Hirt Debt Utilization Ratios Saxton Company Industry Average 11. Debt to total asets = = 37.5%33% 12. Times interest earned = = 11 7 times 13. Fixed charge coverage = = 65.5 times Total debt Total assets $600,000 $1,600,000 Income before interest and taxes Interest $550,000 $50,000 Income before fixed charges and taxes Fixed charges $600,000 $100,000 T 3-8

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th 9 ©The McGraw-Hill Companies, Inc. 2000 Foundations of Financial Management E D I T I O N N I N T H Irwin/McGraw-Hill Block Hirt Saxton Industry Company AverageConclusion A. Profitability 1.Profit Margin ……………… 5.0%6.7%Below average 2.Return on Assets …………..12.5%10.0%Above average due to high turnover 3.Return on Equity ………….. 20.0%15.0%Good due to ratios 2 and 10 B. Asset Utilization 4.Receivables turnover …….11.410.0Good 5.Average collection period….32.036.0Good 6.Inventory turnover ………...10.87.0Good 7.Fixed asset turnover ……….5.05.4Below average 8.Total asset turnover ……….2.51.5Good C. Liquidity 9.Current ratio ………………2.672.1Good 10.Quick Ratio ………………..1.431.0Good D. Debt Utilization 11.Debt to total assets ………..37.5%33.0%Slightly more debt 12.Times interest earned …….11.07.0Good 13.Fixed charge coverage …...6.05.5Good T 3-9 Table 3-3--Ratio Analysis

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McGraw-Hill/Irwin Copyright © 2005 by The McGraw-Hill Companies, Inc. All rights reserved. Chapter 19 Financial Statement Analysis.

McGraw-Hill/Irwin Copyright © 2005 by The McGraw-Hill Companies, Inc. All rights reserved. Chapter 19 Financial Statement Analysis.

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