P6: Chapter 2 (PPT slide 58 and 59): Table 3.8 Summary of Bartlett Company Ratios (20102015, Including 2015 Industry Averages) Evaluation" Cross- sectional Time-series 2015 2013-2015 Overall Industry average 2015 Year 2014 Ratio Formula 2013 2015 Liquidity Current ratio 2.04 2.08 1.97 2.05 OK OK OK Current assets Current liabilities Current assets Inventory Current liabilities Quick (acid-test) ratio 1.32 1.46 1.51 1.43 OK Good Good Activity Inventory turnover 5.1 5.7 7.2 6.6 Good Good Good Average collection period 43.9 days 51.2 days 59.7 days 44.3 days Poor Poor Poor Cost of goods sold Inventory Accounts receivable Average sales per day Accounts payable Average purchases per day Sales Total assets Average payment period 75.8 days 81.2 days 95.4 days 66.5 days Poor Poor Poor Total assets turnover 0.94 0.79 0.85 0.75 OK OK OK Debt Debt ratio Total liabilities Total assets 36.8% 44.3% 45.7% 40.0% OK OK OK Times interest earned ratio Earnings before interest and taxes Interest 5.6 3.3 4.5 4.3 Good OK OK Fixed-payment coverage ratio Earnings before interest and taxes + Lease payments Int. + Lease pay. + {(Prin. + Pref. div.) x [1/(1 - T)]} 2.4 1.4 1.4 19 1.9 1.5 Good OK Good Profitability Gross profit margin Gross profits Sales 31.4% 33.3% 32.1% 30.0% OK OK OK Operating profit margin Operating profits Sales 14.6% 11.8% 13.6% 11.0% Good OK Good Net profit margin Earnings available for common stockholders Sales 8.2% 5.4% 7.2% 6.2% Good OK Good Evaluation Year 2014" Industry average 2015 Cross sectional Time-series 2015 2013-2015 Overall Formula 2013 2015 Ratio Profitability (cont.) Earnings per share (EPS) $3.26 $1.81 $2.90 $2.26 Good OK Good Earnings available for common stockholders Number of shares of common stock outstanding Earnings available for common stockholders Total assets Return on total assets (ROA) 7.8% 4.2% 6.1% 4.6% Good OK Good Return on equity (ROE) Earnings available for common stockholders Common stock equity 13.7% 8.5% 12.6% 8.5% Good OK Good Market Pricelearnings (P/E) ratio 10.5 10.00 11.1 12.5 OK OK OK Market price per share of common stock Earnings per share Market price per share of common stock Book value per share of common stock Market/book (M/B) ratio (M 1.25 0.85 1.40 1.30 OK OK OK "Calculated from data not included in this chapter. "Calculated by using the financial statements presented in Tables 3.1 and 3.2. Obtained from sources not included in this chapter. dSubjective assessments based on data provided. The market price per share at the end of 2014 was $18.06. Solve the following questions: 1. If you as a supplier are planning to supply raw materials to Bartlett Company, you will supply your goods on credit? If so or not, then why so? 2. If you decided to supply your raw materials to Bartlett Company, will you supply on credit? 3. If you are working a financial officer of Chase, Bartlett Company came to you and seek for a loan, will you approve loan for the company? 4. If you are planning to invest your saving to stock market, will you buy stock/share of Bartlett Company? 5. If you decided to buy Bartlett Company's stock, how much you are willing to pay for 1 stock? 6. Write a short comment on overall remarks for Activity ratios only (Hints: Response would be on why OK or why Good) P6: Chapter 2 (PPT slide 58 and 59): Table 3.8 Summary of Bartlett Company Ratios (20102015, Including 2015 Industry Averages) Evaluation" Cross- sectional Time-series 2015 2013-2015 Overall Industry average 2015 Year 2014 Ratio Formula 2013 2015 Liquidity Current ratio 2.04 2.08 1.97 2.05 OK OK OK Current assets Current liabilities Current assets Inventory Current liabilities Quick (acid-test) ratio 1.32 1.46 1.51 1.43 OK Good Good Activity Inventory turnover 5.1 5.7 7.2 6.6 Good Good Good Average collection period 43.9 days 51.2 days 59.7 days 44.3 days Poor Poor Poor Cost of goods sold Inventory Accounts receivable Average sales per day Accounts payable Average purchases per day Sales Total assets Average payment period 75.8 days 81.2 days 95.4 days 66.5 days Poor Poor Poor Total assets turnover 0.94 0.79 0.85 0.75 OK OK OK Debt Debt ratio Total liabilities Total assets 36.8% 44.3% 45.7% 40.0% OK OK OK Times interest earned ratio Earnings before interest and taxes Interest 5.6 3.3 4.5 4.3 Good OK OK Fixed-payment coverage ratio Earnings before interest and taxes + Lease payments Int. + Lease pay. + {(Prin. + Pref. div.) x [1/(1 - T)]} 2.4 1.4 1.4 19 1.9 1.5 Good OK Good Profitability Gross profit margin Gross profits Sales 31.4% 33.3% 32.1% 30.0% OK OK OK Operating profit margin Operating profits Sales 14.6% 11.8% 13.6% 11.0% Good OK Good Net profit margin Earnings available for common stockholders Sales 8.2% 5.4% 7.2% 6.2% Good OK Good Evaluation Year 2014" Industry average 2015 Cross sectional Time-series 2015 2013-2015 Overall Formula 2013 2015 Ratio Profitability (cont.) Earnings per share (EPS) $3.26 $1.81 $2.90 $2.26 Good OK Good Earnings available for common stockholders Number of shares of common stock outstanding Earnings available for common stockholders Total assets Return on total assets (ROA) 7.8% 4.2% 6.1% 4.6% Good OK Good Return on equity (ROE) Earnings available for common stockholders Common stock equity 13.7% 8.5% 12.6% 8.5% Good OK Good Market Pricelearnings (P/E) ratio 10.5 10.00 11.1 12.5 OK OK OK Market price per share of common stock Earnings per share Market price per share of common stock Book value per share of common stock Market/book (M/B) ratio (M 1.25 0.85 1.40 1.30 OK OK OK "Calculated from data not included in this chapter. "Calculated by using the financial statements presented in Tables 3.1 and 3.2. Obtained from sources not included in this chapter. dSubjective assessments based on data provided. The market price per share at the end of 2014 was $18.06. Solve the following questions: 1. If you as a supplier are planning to supply raw materials to Bartlett Company, you will supply your goods on credit? If so or not, then why so? 2. If you decided to supply your raw materials to Bartlett Company, will you supply on credit? 3. If you are working a financial officer of Chase, Bartlett Company came to you and seek for a loan, will you approve loan for the company? 4. If you are planning to invest your saving to stock market, will you buy stock/share of Bartlett Company? 5. If you decided to buy Bartlett Company's stock, how much you are willing to pay for 1 stock? 6. Write a short comment on overall remarks for Activity ratios only (Hints: Response would be on why OK or why Good)