14. A spreadsheet containing financial statements for Men's Wearhouse, Inc., for fiscal years 2006-2010 is available for download from McGraw-Hill's Connect or your course instructor (see the Preface for more information). a. Use the spreadsheet to calculate as many of the company's profitability, turnover-control, and leverage and Page 76 liquidity ratios as you can for these years (see Table 2.4 ). b. What do these ratios suggest about the company's performance over this period? TABLE 2.4 Definitions of Principal Ratios Appearing in the Chapter Profitability Ratios Return on equity Return on assets Net income/Shareholders' equity Net income/Assets Earnings before interest and taxes x (1 Tax rate) Interest-bearing debt + Shareholders' equity Return on invested capital Net income/Sales Gross profit/Sales Price per share/Earnings per share Profit margin Gross margin Price to earnings Turnover-Control Ratios Asset turnover Fixed-asset turnover Inventory turnover Collection period Sales/Assets Sales/Net property, plant, and equipment Cost of goods sold/Ending inventory Accounts receivable/Credit sales per day (If credit sales unavailable, use sales) Cash and securities/Sales per day Accounts payable/Credit purchases per day (If purchases unavailable, use cost of goods sold) Days' sales in cash Payables period Leverage and Liquidity Ratios Assets to equity Debt to assets III Assets/Shareholders' equity Total liabilities/Assets (Interest-bearing debt is often substituted for total liabilities) Total liabilities/Shareholders' equity Earnings before interest and taxes/Interest expense Debt to equity Times interest earned | Times burden covered Debt to assets (market value) Earnings before interest and taxes Interest exp. + Prin. pay./(1 Tax rate) Total liabilities No. equity shares x Price/share + Total liabilities Total liabilities No. equity shares x Price/share Current assets/Current liabilities Current assets Inventory Current liabilities Debt to equity (market value) Current ratio Acid test 14. A spreadsheet containing financial statements for Men's Wearhouse, Inc., for fiscal years 2006-2010 is available for download from McGraw-Hill's Connect or your course instructor (see the Preface for more information). a. Use the spreadsheet to calculate as many of the company's profitability, turnover-control, and leverage and Page 76 liquidity ratios as you can for these years (see Table 2.4 ). b. What do these ratios suggest about the company's performance over this period? TABLE 2.4 Definitions of Principal Ratios Appearing in the Chapter Profitability Ratios Return on equity Return on assets Net income/Shareholders' equity Net income/Assets Earnings before interest and taxes x (1 Tax rate) Interest-bearing debt + Shareholders' equity Return on invested capital Net income/Sales Gross profit/Sales Price per share/Earnings per share Profit margin Gross margin Price to earnings Turnover-Control Ratios Asset turnover Fixed-asset turnover Inventory turnover Collection period Sales/Assets Sales/Net property, plant, and equipment Cost of goods sold/Ending inventory Accounts receivable/Credit sales per day (If credit sales unavailable, use sales) Cash and securities/Sales per day Accounts payable/Credit purchases per day (If purchases unavailable, use cost of goods sold) Days' sales in cash Payables period Leverage and Liquidity Ratios Assets to equity Debt to assets III Assets/Shareholders' equity Total liabilities/Assets (Interest-bearing debt is often substituted for total liabilities) Total liabilities/Shareholders' equity Earnings before interest and taxes/Interest expense Debt to equity Times interest earned | Times burden covered Debt to assets (market value) Earnings before interest and taxes Interest exp. + Prin. pay./(1 Tax rate) Total liabilities No. equity shares x Price/share + Total liabilities Total liabilities No. equity shares x Price/share Current assets/Current liabilities Current assets Inventory Current liabilities Debt to equity (market value) Current ratio Acid test
