Complete Chapter 3 Application Questions & Exercises: #2 found on page 98. Use Exhibit 3.8 found on page 91 to complete the 19 financial ratios for Campbell Soup (Case #15 - p. C91-C101). Use the financial information located on C98-C100 to calculate each ratio.
I. Short-term solvency, or liquidity, ratios Current ratio = Current assets Current liabilities Current assets Inventory Quick ratio Current liabilities Cash Cash ratio Current liabilities II. Long-term solvency, or financial leverage, ratios Total debt ratio= otal assets Total equity Total assets Debt-equity ratio = Total debt/Total equity Equity multiplier = Total assets/Total equity EBIT Times interest earned ratio Interest EBIT Depreciation Cash coverage ratio Interest III. Asset utilization, or turnover, ratios Cost of goods sold Inventory turnover Inventory 365 days Days' sales in inventory Inventory turnover Sales Receivables turnover Accounts receivable 365 days Days sales in receivables Receivables over Sales Total asset turnover Total assets Total assets Capital intensity Sales IV. Profitability ratios Net income Profit margin Sales Net income Total assets Return on assets (ROA) = Return on equity (ROE) = Net income Total equity ROE=Net income Sales Sales Assets Assets Equity V. Market value ratios Price per share Price-earnings ratio Earnings per share Market-to-book ratio Market value per share Book value per share EXHIBIT 7 Campbell Balance Sheet CAMPBELL SOUP COMPANY Consolidated Statements of Earnings (millions, except per share amounts) July 31, 2016 August 2, 2015 Current assets $296 Cash and cash equivalents 253 Accounts receivable, net 626 647 940 Inventories 995 198 Other current assets 46 Total current assets 2,093 1,908 Plant assets, net of depreciation 2,407 2,347 Goodwill 2,263 2,344 Other intangible assets, net of amortization 1,152 1,205 Other assets ($34 and $0 attributable to variable interest entity) 107 88 $7,837 $8,077 Total assets Current liabilities $1,219 $1,543 Short-term borrowings Payable to suppliers and others 610 544 Accrued liabilities 604 589 Dividend payable 100 101 Accrued income taxes 22 29 Total current liabilities 2,555 2,806 Long-term debt 2,314 2,539 Deferred taxes 396 505 Other liabilities 1,039 850 6,700 Total liabilities 6,304 Commitments and contingencies Campbell Soup Company shareholders' equity Capital stock, $.0373 par value; authorized 560 shares; issued 323 shares 12 12 Additional paid-in capital 354 339 Earnings retained in the business 1,927 1,754 Capital stock in treasury, at cost (664) (556) Accumulated other comprehensive loss (104) (168) Total Campbell Soup Company shareholders' equity 1,525 1,381 Noncontrolling interests (4) Total equity 1,533 1,377 Total liabilities and equity $7,837 $8,077 Go to library tab in Connect to access Case Financials. Source: Campbell Soup Company Annual Report, 2016. Page 100 EXHIBIT 8 Campbell's Key Ratios Valuation P/E Current 31.73 P/E Ratio (with extraordinary items) 35.71 P/E Ratio (without extraordinary items) 34.40 Price to Sales Ratio 2.43 Main content Price to Book Ratio 12.58 Price to Cash Flow Ratio 13.24 Enterprise Value to EBITDA 14.32 Enterprise Value to Sales 2.61 Total Debt to Enterprise Value 0.16 Efficiency Revenue/Employee 482,485.00 Income Per Employee 34,121.00 Receivables Turnover 12.51 Total Asset Turnover 1.00 Liquidity 0.75 Current Ratio Quick Ratio 0.38 Cash Ratio 0.12 Profitability Gross Margin 34.61 14.29 Operating Margin Pretax Margin 10.66 Net Margin 7.07 Return on Assets 7.07 Return on Equity 38.76 Return on Inve sted Capital 14.49 Capital Structure Total Debt to Total Equity 231.67 Total Debt to Total Capital 69.85 Total Debt to Total Assets 45.08 Long-Term Debt to Equity 151.74 Long-Term Debt to Total Capital 45.75 INDIVIDUAL ASSIGNMENT 2 INDIVIDUAL ASSIGNMENT 2 Chapter 3 Application Questions & Exercises: Return 563/7837 007 16 Assets Total Assets Financial Ratios for Campbell Soup Net Income 563/1533 17 Return on Equity 037 Total Equity Calculated Ratio Number Ratio Name Formula Values Used Sales x Sales/ ROE 18 Assets x Assets Current Assets A 1908/2.555 0.75 Current Ratio Current are Frice Earnings Liabilities /Earnings Per Current Assets Market Value Per Share/ Book Value Per (1,908-940)/ 2.555 y Current 0.38 Quick Ratio 20 Market-to-Book Ratio Liabilities Ca ren 296/2555 Cash Ratio 0.12 Liahilities Total Assets (7,837-1533) 7,837 4 Total Debt Ratic Total Equity O.80 Total Debt/ Total Equity Debt to Equity 6.304/1533 5 4.11 Ratio Ttl Fauit 5.11 6 Equity Multiplicr 7.837/1533 Times Interest 7 EBIT/Interest Earned Ratio FBIT Depreciation Interest Cash Coverage Ratio 9 Turnover Inventory 365 Days/ Inventory Days' Sales in Inventory 10 Sales Receivable 11 Accounts Turnover 365 Days/ Receivables Tumover Sa Days' Sales in Receivables 12 otal 13 Arrats Total Assets 102 Tumover 7,961/7,837 14 Capital Intensity 7,837/7961 0.98 Net Income. Sales 007 15 Profit Margin 563/7961 I. Short-term solvency, or liquidity, ratios Current ratio = Current assets Current liabilities Current assets Inventory Quick ratio Current liabilities Cash Cash ratio Current liabilities II. Long-term solvency, or financial leverage, ratios Total debt ratio= otal assets Total equity Total assets Debt-equity ratio = Total debt/Total equity Equity multiplier = Total assets/Total equity EBIT Times interest earned ratio Interest EBIT Depreciation Cash coverage ratio Interest III. Asset utilization, or turnover, ratios Cost of goods sold Inventory turnover Inventory 365 days Days' sales in inventory Inventory turnover Sales Receivables turnover Accounts receivable 365 days Days sales in receivables Receivables over Sales Total asset turnover Total assets Total assets Capital intensity Sales IV. Profitability ratios Net income Profit margin Sales Net income Total assets Return on assets (ROA) = Return on equity (ROE) = Net income Total equity ROE=Net income Sales Sales Assets Assets Equity V. Market value ratios Price per share Price-earnings ratio Earnings per share Market-to-book ratio Market value per share Book value per share EXHIBIT 7 Campbell Balance Sheet CAMPBELL SOUP COMPANY Consolidated Statements of Earnings (millions, except per share amounts) July 31, 2016 August 2, 2015 Current assets $296 Cash and cash equivalents 253 Accounts receivable, net 626 647 940 Inventories 995 198 Other current assets 46 Total current assets 2,093 1,908 Plant assets, net of depreciation 2,407 2,347 Goodwill 2,263 2,344 Other intangible assets, net of amortization 1,152 1,205 Other assets ($34 and $0 attributable to variable interest entity) 107 88 $7,837 $8,077 Total assets Current liabilities $1,219 $1,543 Short-term borrowings Payable to suppliers and others 610 544 Accrued liabilities 604 589 Dividend payable 100 101 Accrued income taxes 22 29 Total current liabilities 2,555 2,806 Long-term debt 2,314 2,539 Deferred taxes 396 505 Other liabilities 1,039 850 6,700 Total liabilities 6,304 Commitments and contingencies Campbell Soup Company shareholders' equity Capital stock, $.0373 par value; authorized 560 shares; issued 323 shares 12 12 Additional paid-in capital 354 339 Earnings retained in the business 1,927 1,754 Capital stock in treasury, at cost (664) (556) Accumulated other comprehensive loss (104) (168) Total Campbell Soup Company shareholders' equity 1,525 1,381 Noncontrolling interests (4) Total equity 1,533 1,377 Total liabilities and equity $7,837 $8,077 Go to library tab in Connect to access Case Financials. Source: Campbell Soup Company Annual Report, 2016. Page 100 EXHIBIT 8 Campbell's Key Ratios Valuation P/E Current 31.73 P/E Ratio (with extraordinary items) 35.71 P/E Ratio (without extraordinary items) 34.40 Price to Sales Ratio 2.43 Main content Price to Book Ratio 12.58 Price to Cash Flow Ratio 13.24 Enterprise Value to EBITDA 14.32 Enterprise Value to Sales 2.61 Total Debt to Enterprise Value 0.16 Efficiency Revenue/Employee 482,485.00 Income Per Employee 34,121.00 Receivables Turnover 12.51 Total Asset Turnover 1.00 Liquidity 0.75 Current Ratio Quick Ratio 0.38 Cash Ratio 0.12 Profitability Gross Margin 34.61 14.29 Operating Margin Pretax Margin 10.66 Net Margin 7.07 Return on Assets 7.07 Return on Equity 38.76 Return on Inve sted Capital 14.49 Capital Structure Total Debt to Total Equity 231.67 Total Debt to Total Capital 69.85 Total Debt to Total Assets 45.08 Long-Term Debt to Equity 151.74 Long-Term Debt to Total Capital 45.75 INDIVIDUAL ASSIGNMENT 2 INDIVIDUAL ASSIGNMENT 2 Chapter 3 Application Questions & Exercises: Return 563/7837 007 16 Assets Total Assets Financial Ratios for Campbell Soup Net Income 563/1533 17 Return on Equity 037 Total Equity Calculated Ratio Number Ratio Name Formula Values Used Sales x Sales/ ROE 18 Assets x Assets Current Assets A 1908/2.555 0.75 Current Ratio Current are Frice Earnings Liabilities /Earnings Per Current Assets Market Value Per Share/ Book Value Per (1,908-940)/ 2.555 y Current 0.38 Quick Ratio 20 Market-to-Book Ratio Liabilities Ca ren 296/2555 Cash Ratio 0.12 Liahilities Total Assets (7,837-1533) 7,837 4 Total Debt Ratic Total Equity O.80 Total Debt/ Total Equity Debt to Equity 6.304/1533 5 4.11 Ratio Ttl Fauit 5.11 6 Equity Multiplicr 7.837/1533 Times Interest 7 EBIT/Interest Earned Ratio FBIT Depreciation Interest Cash Coverage Ratio 9 Turnover Inventory 365 Days/ Inventory Days' Sales in Inventory 10 Sales Receivable 11 Accounts Turnover 365 Days/ Receivables Tumover Sa Days' Sales in Receivables 12 otal 13 Arrats Total Assets 102 Tumover 7,961/7,837 14 Capital Intensity 7,837/7961 0.98 Net Income. Sales 007 15 Profit Margin 563/7961
