1. What is the measure of the ability to meet short-term obligations?

Group of answer choices

average daily sales

profit margin

debt ratio

current ratio

2. Do you want this measure higher or lower?

Group of answer choices

lower

higher

3. Which company performed best by this measure in 2015?

Group of answer choices

AMD

INTC

MXIM

QCOM

4. What is the measure for the time to receive payment after a sale?

Group of answer choices

Days sales in inventory

Quick ratio

Basic earning power

Days sales outstanding

5. Do you want this measure higher or lower?

Group of answer choices

Lower

Higher

6. Which company performed best by this measure in 2015?

Group of answer choices

INTC

QCOM

MXIM

AMD

7. What is the measure of how long inventory sits?

Group of answer choices

Days sales in inventory

Inventory turnover ratio

Return on total assets

Days sales outstanding

8. Do you want this measure higher or lower?

Group of answer choices

Higher

Lower

9. Which company performed best by this measure in 2015?

Group of answer choices

AMD

INTC

MXIM

QCOM

10. What is the measure of how many times inventory is replaced per year?

Group of answer choices

Days sales outstanding

Days sales in inventory

Times interest earned

Inventory turnover ratio

11. Do you want this measure higher or lower?

Group of answer choices

Lower

Higher

12. Which company performed best by this measure in 2015?

Group of answer choices

AMD

QCOM

INTC

MXIM

13. What is the measure of the ability to generate sales from fixed assets?

Group of answer choices

Return on total assets

Debt ratio

Fixed assets turnover ratio

Total assets turnover ratio

14. Do you want this measure higher or lower?

Group of answer choices

Lower

Higher

15. Which company performed best by this measure in 2015?

Group of answer choices

AMD

MXIM

INTC

QCOM

QCOM 2013-09 2014-09 2015-09 MXIM 2013-06 2014-06 2015-06 19,555 1,302 5,213 3.75 3.50 22,413 22,099 1,458 1,492 6,013 6,100 3.73 3.62 3.48 3.38 1,939 276 405 4.79 4.11 2,087 289 399 5.24 4.51 2,319 289 383 6.05 5.30 279 1,091 4,216 2,307 6.32 2,142 2,412 1,964 2,995 2,487 2,534 45,516 48,574 50,796 24,866 26,487 25,281 68.13 72.57 69.26 31.44 33.24 28.36 19.11 20.09 21.54 19.10 18.17 16.94 8.30 10.65 9.98 0.55 0.55 0.50 285 1,373 3,936 2,442 6.69 42.67 41.20 8.86 1.78 0.62 296 1,332 4,406 2,454 6.72 44.00 43.03 8.48 1.84 0.56 44.11 45.65 8.00 2.12 0.55 INTC AMD 2013-12 2014-12 2015-12 2013-12 2014-12 2015-12 Liquidity ratios - ability to meet short term obligations Current assets CA 32,084 27,730 40,356 2,884 2,736 2,320 Inventories INV 4,172 4,273 5,167 884 685 678 Current liabilities CL 13,568 16,011 15,667 1,618 1,440 1,403 Current ratio CR CA/CL 2.36 1.73 2.58 1.78 1.90 1.65 Quick ratio QRCA-INV/CL 2.06 1.47 2.25 1.24 1.42 1.17 Asset management ratios - ability to generate and collect revenue from assets Receivables AR 3,582 4,427 4,787 832 818 533 Net fixed assets FA 31,428 33,238 31,858 346 302 188 Total assets TA 92,358 91,900 103,065 4,337 3,767 3,109 Sales Sales 52,708 55,870 55,355 5,299 5,506 3,881 Average daily sales ADS - Sales/365 144.41 153.07 151.66 14.52 15.08 10.63 Days sales outstanding DSO - AR/ADS 24.81 28.92 31.56 57.31 54.23 50.13 Days sales in inventory DSI = INV/ADS 28.89 27.92 34.07 60.89 45.41 63.76 Inventory turnover ratio ITR - Sales/INV 12.63 13.08 10.71 5.99 8.04 5.72 Fixed assets turnover ratio FATR - Sales/FA 1.68 1.68 1.74 15.32 18.23 20.64 Total asset turnover ratio TATR Sales/TA 0.57 0.61 0.54 1.22 1.46 1.25 Debt management ratios Total liabilities TL 34,102 35,123 41,083 3,973 3,580 3,521 EBITDA EBITDA 20,323 23,896 22,713 339 48 -314 EBIT EBIT 12,291 15,347 14,002 103 -155 -481 Interest payments 1 244 192 337 177 177 160 Principal payments PP 0 0 0 0 0 0 Lease payments LP 270 257 253 64 59 47 Debt ratio DR - TU/TA 0.37 0.38 0.40 0.92 0.95 1.13 Times interest earned TIE EBIT/1 50.37 79.93 41.55 0.58 -0.88 -3.01 EBITDA coverage ratio ECR = (EBITDA+LP)/(1+PP+LP) 39.54 53.79 38.93 1.41 0.45 -1.29 Profitability ratios NI avail CS NI 9,620 11,704 11,420 -83 -403 -660 Total common equity TCE 58.256 56,777 61,982 544 187 -412 Profit margin PM = NI/Sales 0.18 0.21 0.21 -0.02 -0.07 -0.17 Basic earning power BEP EBIT/TA 0.13 0.17 0.14 0.02 -0.04 -0.15 EBITDA margin EBITDA / Sales 0.39 0.43 0.41 0.06 -0.08 Return on total assets ROA - NI/TA 0.10 0.13 0.11 -0.02 -0.11 -0.21 Return on equity ROE - NI / TCE 0.17 0.21 0.18 -0.15 -2.16 1.60 Market value ratios Price 25.60 37.55 34.98 3.78 2.65 2.92 Price-to-earnings 13.69 16.36 14.97 N/A N/A N/A Price-to-book 2.18 3.14 2.67 5.04 11.00 N/A DuPont analysis Profit margin PM = Ni/Sales 0.18 0.21 0.21 -0.02 -0.07 -0.17 TATR TATR - Sales/TA 0.57 0.61 0.54 1.22 1.46 1.25 Equity multiplier EMTA/TCE 1.59 1.62 1.66 7.97 20.14 -7.55 Return on equity ROE - PM TATR*EM 0.17 0.21 0.18 -0.15 -2.16 1.60 9,429 9,408 19,382 8,247 8,700 6,990 7,230 7,550 5,776 23 5 104 0 0 0 90 91 99 0.21 0.19 0.38 314.35 1510.00 55.54 73.78 91.57 34.92 1,428 796 588 16 0 10 0.36 35.87 31.08 1,976 667 422 27 0 11 0.45 15.64 17.93 1,926 537 237 33 0 9 0.46 7.30 13.15 6,853 36,088 0.28 0.16 0.33 0.15 0.19 7,967 5,271 39,169 31,421 0.30 0.21 0.16 0.11 0.33 0.28 0.16 0.10 0.20 0.17 455 2,508 0.19 0.15 0.33 0.12 0.18 355 2,430 0.14 0.10 0.27 0.08 0.15 206 2,290 0.09 0.06 0.23 0.05 0.09 0.01 67.38 17.01 3.15 75.06 16.25 3.20 53.22 13.85 2.58 27.78 17.69 3.19 33.91 25.11 3.97 34.75 35.90 4.32 0.28 0.55 1.26 0.19 0.30 0.55 1.24 0.20 0.21 0.50 1.62 0.17 0.19 0.62 1.57 0.18 0.14 0.56 1.81 0.15 0.09 0.55 1.84 0.09 Background: AMD long ago decided to sell its manufacturing facilites and become "fabless" (without fabrication facilities). Intel (INTC) still manufactures its own semiconductors (chips) and has spent billions expanding capacity. INTC decided in 2016 to reorganize and focus more on mobile chips rather than desktop computers. Qualcomm (QCOM) and Maxim (MXIM) produce mobile communications chips. QCOM is fabless like AMD while MXIM manufactures its own semiconductors. This case enables students to simultaneously learn various financial statement analysis ratios and address the questions: 1) Was AMD's decision to go fabless a good one? 2) Was INTC's decision to focus on mobile a good one? The three aspects: 1. There is X. 2. X is to be understood. 3. X has been understood. The three aspects applied to financial statement analysis: What is the measure for X? Should X be higher or lower? Which company is best by metric X? Apply the three aspects to each of the following: 1. Ability to meet short-term obligations 2. Time to receive payment after sale 3. How long invetory sits 4. How many times inventory is replaced per year 5. Ability to generate sales from fixed assets 6. Ability to generate sales from total assets 7. Indebtedness 8. Ability to repay long-term debt 9. Ability to repay short-term debt 10. Income per dollar of sales