VIII. Ratio Analysis. In the accompanied Excel spreadsheet please calculate and interpret the selected ratio analysis. Your answer should include a comparison of the current and prior years analysis. Page 6 of 6 Selected Ratios Financial Statement Analysis A. Profitability - the ability to earn satisfactory income (profit) B Liquidity-the ability to pay bills when due and meet unexpected cash mode A. Profitability Ratios 1. Profit Margin = Net Income/Net Revenues This ratio shows the amount of income that was generated by each $1 of sales 2. Asset tumover = Net Revenues/Average total assets This ratio shows the amount of revenue generated by each $1 of assets. 3. Retum on Assets = Net Income/Average Total assets This ratio shows the amount of Income generated by each 51 of assets. PM X Assets T/O ROA B. Liquidity Ratios or i Inventory Turnover = Cost Of Goods Sold/Average Inventory This ratio shows the amount of times the company sold its inventory during the accounting period. ii. Receivable Turnover - Net sales/Average Account Receivable This ratio shows the number of times the company collected its Accounts Receivable during the accounting period. Supplemental financial ratios for assessing liquidity and operate asset mat Hill Current ratios = Current Assets/Current Liabilities - How many times did total CA cover CL Quick ratios = (Cash + Marketable Securities + Accounts Receivable) / Current Liabilities - How many times did current financial assets cover Current Liabilities. iv. 2018 12 Months Ended May 31, 2017 May 31, 2018 May 31, 2016 $36,397 20,441 15,956 3,577 7,934 11,511 54 $ 34,350 19,038 15,312 3,341 7,222 10,563 Consolidated Statements of Income - USD ($) $ in Millions Income Statement [Abstract] Revenues Cost of sales Gross profit Demand creation expense Operating overhead expense Total selling and administrative expense Interest expense (income), net Other expense (income), net Income before income taxes Income tax expense NET INCOME Earnings per common share: Basic (in dollars per share) Diluted (in dollars per share) Dividends declared per common share (in dollars per share) $ 32,376 17,405 14,971 3,278 7,191 10,469 59 4,325 2,392 $ 1,933 (196) 4,886 646 $ 4,240 (140) 4,623 863 $ 3,760 $ 1.19 1.17 $ 0.78 $2.56 2.51 $0.70 $ 2.21 2.16 0.62 2017 12 Months Ended May 31, 2017 May 31, 2016 May 31, 2015 $ 4,240 $3,760 $3,273 Consolidated Statements of Comprehensive Income - USD (5) Sin Millions Statement of Comprehensive Income (Abstract] Net Income Other comprehensive income (loss), net of tax: Change in net foreign currency translation adjustment Change in net gains (losses) on cash flow hedges Change in net gains (losses) on other Total other comprehensive income (loss), net of tax TOTAL COMPREHENSIVE INCOME 16 (20) (176) (757) 1,188 (515) (32) (531) $ 3,709 1928) $ 2,832 1,161 $ 4,434 May 31, 2017 May 31, 2016 $ 3,808 2,371 3,677 5,055 1,150 16,061 3,989 283 139 2,787 23,259 $ 3,138 2,319 3,241 4,838 1,489 15,025 3,520 281 131 2,422 21,379 Consolidated Balance Sheets - USD (S) S in Millions Current assets: Cash and equivalents Short-term investments Accounts receivable, net Inventories Prepaid expenses and other current assets Total current assets Property, plant and equipment, net Identifiable intangible assets, net Goodwill Deferred income taxes and other assets TOTAL ASSETS Current liabilities: Current portion of long-term debt Notes payable Accounts payable Accrued liabilities Income taxes payable Total current liabilities Long-term debt Deferred income taxes and other liabilities Commitments and contingencies Redeemable preferred stock Shareholders' equity: Capital in excess of stated value Accumulated other comprehensive (loss) income Retained earnings Total shareholders' equity TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY Class A Convertible Common Stock Shareholders' equity: Common stock at stated value Class B Common Stock Shareholders' equity: Common stock at stated value 6 44 3251 2,048 2,191 3,011 3,037 84 85 5,474 5,358 3,471 1,993 1,907 1,770 0 0 8,638 (213) 3,979 12,407 23,259 7,786 318 4,151 12,258 21,379 Income Statement Fiscal Year 2018 Fiscal Year 2017 Change Change Explanation Explanation 1 Fiscal Year 2018 Balance Sheet Fiscal Year 2017 Change Change Explanation Explanation