***Answers must include excel formulas!***
1. Compute and interpret financial ratios that managers use to assess liquidity. 2. Compute and interpret financial ratios that managers use for asset management purposes. 3. Compute and interpret financial ratios that managers use for debt management purposes. Clipboard Font Styles A1 3 fa Recent financial statements for Zimmer, Inc. are as follows: B E F 4 This Year Last Year This Year 5 Assets 6 Current assets: 7 Cash $ $4,980,000 2,988,000 1,992,000 360,000 $ 310,000 Sales (all on account) 220,000 80,000 Cost of goods sold 775,000 700,000 Gross margin 925,000 750,000 Selling and administrative expenses 355,000 195,000 Operating expenses 2,635,000 2,035,000 Depreciation and amortization 1,975,000 1,800,000 General and administrative expenses 75,000 100,000 Total selling and administrative expenses 4.685.000 3.935,000 Net operating income Interest expense Net income before taxes 985,500 410,500 150,000 1,546,000 S 8 Marketable securities 9 Accounts receivable, net 10 Inventory 11 Other current assets 12 Total current assets 13 Plant and equipment, net 14 Other assets 15 Total assets 16 Liabilities and Stockholders' Equity 17 Current Liabilities: 18 Accounts payable 19 Short-term bank loans 20 Accrued payables 21 Other current liabilities 22 Total current liabilities 23 Bonds payable, 10% 24 Total liabilities 25 Stockholders' equity: 26 Common stock Sheet1 446,000 60,000 386,000 $ 250,000 $ 225,000 Income taxes 600,000 Net income 395,000 135,100 $_250.900 750,000 550,000 275,000 1,825,000 $ 1.00 223,400 Additional information: 1,443,400 Dividend per share paid in current year 400,000 Market price of shares at year end 1,843,400 Par value of common stock per share 575,000 42.00 2,400,000 20.00 1.150.000 1.150.000 Number of shares outstanding READY HH 100% A B E F 1,150,000 Number of shares outstanding 941,600 2,091,600 $ 3.935.000 25 Stockholders' equity: 26 Common stock 1,150,000 27 Retained earnings 1,135,000 28 Total stockholders' equity 2,285,000 29 Total liabilities and stockholders' equity $ 4.685.000 30 31 Required: 32 Compute the following ratios for the current year only: 33 Gross margin percentage 34 Current ratio (rounded to two decimal places) 35 Acid-test ratio (rounded to two decimal places) 36 Accounts receivable turnover (rounded to two decimal places) 37 Average collection period (rounded to the nearest whole day) 38 Inventory turnover ratio (rounded to two decimal places) 39 Average sales period (rounded to the nearest whole day) 40 Debt-to-equity ratio (rounded to two decimal places) 41 Times interest earned (rounded to two decimal places) 42 Book value per share (rounded to two decimal places) 43 Earnings per share (rounded to two decimal places) Dividend payout ratio (rounded to three decimal places) 45 Dividend yield ratio (rounded to three decimal places) 46 Price-earnings ratio (rounded to two decimal places) 47 44
