Notesale: Turn your study into money

Document Preview

Extracts from the notes are below, to see the PDF you'll receive please use the links above

---

1

Selected Financial Information
From the Financial Statements prepared
For the Year Ended 30 November 2016
Selected 2016 Statement of Financial Position Information:
€
Cash
52,637,000
Accounts Receivable
85,461,000
Inventories
392,664,000
Total Current Assets
548,137,000
Total Assets
925,381,000
Current Liabilities
404,279,000
Total Liabilities
526,038,000
Retained Earnings
210,519,000
Shareholders Equity
178,824,000
925,381,000
Selected 2016 Statement of Profit or Loss Information:
€
Credit Sales
702,989,000
Total Net Sales Revenue
3,382,115,000
Cost of Sales
2,547,367,000
Gross Profit
834,748,000
Operating Expenses
74,093,000
Interest Expense
8,030,000
Tax Expense
41,029,950
Profit After Tax and Available to Ordinary
Shareholders

162,335,000

Selected Other 2015 and 2016 Financial Information (including
Cash Flow Information):
€
Net Cash Provided by Operating Activities ‐ 2016
Accounts Receivable ‐ 30 June 2015
Inventories ‐ 30 June 2015
Total Assets ‐ 30 June 2015
Current Liabilities ‐ 30 June 2015
Total Liabilities ‐ 30 June 2015
Shareholders Equity ‐ 30 June 2015
Dividends (paid in 2016)
Market Price per share as at 30 June 2016
Weighted Average Number of Ordinary Shares

54,993,000
68,748,000
416,430,000
887,006,000
454,592,000
503,946,000
164,715,000
91,213,000
$21
...
35
The higher the ratio the better it is for the company to the investors because it has a bigger asset
value compared to its portion of the liability values
Quick Ratio= (Current Assets‐Inventory)/Current Liabilities
= (548,137,000 ‐ 392,664,000)/ 404,279,000
= 0
...
Therefore, for every €1 of the company’s current liabilities the
company has €0
...
In lay man, the ratio indicates short ‐ in cash
...
13
The company has €0
...

Net Working Capital = Net Working Capital/Total Assets
= (Current Assets – Current Liabilities)/Total Assets
= (548,137,000 ‐ 404,279,000)/ 925,381,000
= 0
...
The company has € 0
...

Percentage of Debt to Asset Formula = Long Term Liabilities/Total Assets x 100%
= *(Total Liabilities – Current liabilities)/Total Assets x 100%

3
= 121,759
...
13x 100/ 13%
*(As a result of selected parts of a Balance Sheet it was assumed the difference between total
liabilities and current liabilities would account for long‐term liabilities)
Therefore, for every €1 in asset the company has € 0
...

Debt to Equity Ratio Formula = Total Liabilities/Total Equity
= 526,038,000/339,343,000
‐

= 1
...

LONG TERM SOLVENCY OR FINANCIAL LEVERAGE RATIOS
Total Debt Ratio = (Total Assets – Total Equity)/ Total Assets
= (925,381,000 ‐ 339,343,000) /925,381,000
= 0
...
63 for every €1 in
liabilities
...

Debt to Equity Ratio = Total Debt/Total Equity
= 526,038,000/339,343,000
=1
...
Depending on the company’s
industry it could be a good sign of financial leverage however, the ratio above 1 it would mean the
company’s is completely debt financed which is not a very good thing to an investor
...
72
The lower the equity multiplier the better is for the company because it would mean that the
company uses ½
...
76% of its equity to finance is its assets and the rest is financed by
debt
...
72
In other words, the company generates 94 times more to its annual interest expense meaning it is
highly likely to settle its interest’s expenses
...

Cash Coverage Ratio = (EBIT + Depreciation)/Interest (Assuming depreciation is €1,000,000)
= 761,655,000/8,030,000
= 94
...
85 for every €1 in interest expense meaning it can easily settle all its interest
expenses and have extra left for other expenses
...
5
This should mean the number of times the company can convert its inventory to sales and in this
case, the higher the times, the better it is for the investors and the lower it is, the more difficult it is
convert inventory to sales
...
5
= 56
...

Receivables Turnover = Sales/Accounts Receivable
= 3,382,115,000/85,461,000
= 40
Receivable turnover means how long the company takes to collects its receivables from its debtors
...
As for this case, the company takes forty days to collects its monies from its
debtors
...
9
A high ratio means that the company barely needs much funding to run its business and the lower
the ratio it means the company needs some funding to run its operations
...

Fixed Asset Turnover = Sales/Net Fixed Assets
= 3,382,115,000/ (925,381,000 ‐ 548,137,000)
= 3,382,115,000/ 377,244,000
=9
The ratio measures how much the company is able to generate revenue from its fixed assets
...
The higher the ratio the better it is for the company and its investors
...
65
The ratio is used to determine how much the company is able to generate revenue from its assets
...
65 per €1 of its assets
...


PROFITABILITY RATIOS
Profit Margin= Net Income/Sales
= 162,335,000/3,382,115,000
= 0
...
In this case, the company manages to keep or retain €0
...
The higher the ratio the more efficient a company is in managing
its sales and expenses
...
17/17%
The ratio indicates how much income the company retains from its assets or how much revenue
generated from assets is retained after all expenses have been paid out
...
17/17% from its assets
...
48
The ratio or percentage indicates how much of the company’s shareholders equity is able to
generate revenue or how much is earned per euro of the shareholder’s equity
...
48 or 48% of revenue from its shareholder’s equity
...
04) x (3
...
72
= 0
...
The higher the percentage the better it is for the shareholders
...
10
The higher the company’s solvency ratio the great the probability of the company to settle out its
debts and the lower the ratio the higher the probability of the company to default on its creditors
...
10 in cash to pay it back
...
016
The margin indicates the amount of cash generated per a euro of sales and the higher the margin
the more lucrative a company is investors
...
016 in cash
...
06
This shows the amount of money generated on per euro of assets meaning the higher the ratio the
more money is generated on every euro of the assets and that means the company‘s management
of assets to generate cash is efficient
...
06 per every €1 of
asset

---