ALL THE INFORMATION IS HERE

Income Statement Sales 100% CGS 60 GP 40% Op. Exp 20 R&D Exp Advert Exp EBIT 10% Int Exp, net 1 EBT 9% Required: Use the common-size financial statements to calculate the following: Note: Every B/S item is divided by TA; and, every 1/S item is divided by Sales. Example: [Int exp, net]/[LT debt] =[int exp, net/Sales]*[TA/LTdebt]*ATO = (1%/36%)*0.90 =0.025 Assume 360 days in a year. 2 marks each Inventory turnover b. A/R turnover c. Operating cycle d. Cash cycle [Use AP turnover = CGS/AP] e. Fixed (PPE) asset turnover Cash ratio g . Quick ratio h. Current ratio i. Debt-to-equity ratio [ST debt + LT debt]/TE j. Times interest earned K . EBIT/Sales 1. EBT/Sales m. EBIT/TA n. TA/TE O. EBT/TEQuestion #1. (30 marks) Common-size financial statements Note: Every B/S item is divided by TA; and, every 1/'S item is divided by Sales. Assets Cash 4% AR 20 Inventory 10 Other CA 6 Total CA 40% PPE, gross 86 AD (30%) PPE, net 56% Investment 3% Intangibles 1 TA 100% Asset turnover (ATO) = [Sales/TA] =0.90 Liabilities and Equity AP 10% ST debt 5% Other 9% Total CL 24% LT debt 36% TL 60% Equity 40% TotalTL+TE 100%