Introduction For each company listed below, compute the debt ratio,, which reveals the proportion of assets financed with debt. Debt ratio Total liabilities/Total assets . Q3 a Debt Total (S in millions) Ratio Liabilities Total Assets Date 50.15% 36,507 Microsoft (MSFT) 72,793 6/30/2008 1/31/2009 98,144 Wal-Mart Stores (WMT) 163,429 $ 235,639 Ford Motor Company (F) 218,328 12/31/2008 Wal-Mart is primarily financed with (debt / equity), resulting in a debt ratio that is (less / more) than 50.00 % , while a company primarily financed with equity will have a debt ratio that is (less / more) than 50.00 %. Ford has a debt ratio greater than (50 % / 100 % ) , indicating its liabilities are (greater / less) than its assets. b. For each company listed below, compute Return on Sales (ROS), which reveals the portion of each revenue dollar that results in profit. ROS Net income/Sales revenue Q4 a. ROS Net Income ($ in millions) Microsoft (MSFT) Year Ended Revenue 29.26% $ 17,681 6/30/2008 60,420 $ 405,607 Wal-Mart Stores (WMT) $ 13,400 1/31/2009 12/31/2008 $ 146,277 Ford Motor Company (F) $ (14,672) Wal-Mart Stores has (greater / less) revenue than Microsoft, but Microsoft has a (higher/ % of every revenue dollar resulted in profit (net income), but for Wal-Mart Stores only % of every revenue dollar resulted in profit. Ford Motor Company reports a b. lower) ROS ratio than Wal-Mart. The ROS ratio for Microsoft indicates (positive / negative) ROS, indicating (revenue et income) is negative. cents of each revenue dollar went to pay for all of the costs of cents of each revenue dollar for profit. For Wal-Mart, C. running the business, leaving di The corporation with the strongest ROS ratio is (MSFT/WMT/ F). How can a company increase its ROS ratio? Does a low ROS ratio indicate a weak corporation? (Yes / No) e. Why? Q5 For each company listed below, compute Asset Turnover, which reveals how efficiently assets are used to generate revenue. Asset Turnover Sales Revenue/ Total Assets a ($ in millions) Microsoft (MSFT) Wal-Mart Stores (WMT) Ford Motor Company (F) Year Ended Revenue Total Assets Asset Turnover 6/30/2008 1/31/2009 $ 405,607 12/31/2008 $146,277 60,420 $ 72,793 $ 163,429 0.8300 $ 218,328 The asset turnover ratios computed above are in the range (less than 3/3 or more). b (MSFT/WMT/F) has the strongest asset turnover, indicating the company makes profits by generating a large volume of revenue using relatively few assets. Wal-Mart generates C. in revenue for every $1 invested in assets. 23