Using the financial statements for HealthSouth Corp for the quarter ending 6/30/

Question

Using the financial statements for HealthSouth Corp for the quarter ending 6/30/2002, or use the current financial statements for either Microsoft or Facebook. Choose your primary ratio and post your analysis.

2 Calculate several ratios—I would suggest at least one from each of the categories (profitability, liquidity, solvency, and activity/efficiency) from chapter 4 (chapter 11 in Marshall) in the text plus at least one ratio that you have found somewhere else or even made up. You should examine these ratios over a 4 year period (No need to look at every quarter). For example you might look at quarter 2 every year for 4 years—including the quarter that I have chosen. Once you are used to looking up financial statements--if you do this strategically you should be able to examine 4 years of data by looking at only two separate years of financial statements.   Please do not discuss all of these ratios. Your goal in calculating a number of ratios is to increase your chances of finding a ratio that is interesting and important.  

INCOME STATEMENTS - USD ($)
shares in Millions, $ in Millions

BALANCE SHEETS - USD ($)
$ in Millions

INCOME STATEMENTS - USD ($)
shares in Millions, $ in Millions

3 Months Ended 6 Months Ended Dec. 31, 2017 Dec. 31, 2016 Dec. 31, 2017 Dec. 31, 2016 Revenue Product $ 17,926 $ 18,273 $ 32,224 $ 33,241 Service and other 10,992 7,553 21,232 14,513 Total revenue 28,918 25,826 53,456 47,754 Cost of revenue Product 5,498 5,378 8,478 8,959 Service and other 5,566 4,523 10,864 8,786 Total cost of revenue 11,064 9,901 19,342 17,745 Gross margin 17,854 15,925 34,114 30,009 Research and development 3,504 3,062 7,078 6,168 Sales and marketing 4,562 4,079 8,374 7,297 General and administrative 1,109 879 2,275 1,924 Operating income 8,679 7,905 16,387 14,620 Other income, net 490 117 766 229 Income before income taxes 9,169 8,022 17,153 14,849 Provision for income taxes 15,471 1,755 16,879 2,915 Net income (loss) $ (6,302) $ 6,267 $ 274 $ 11,934 Earnings (loss) per share: Basic $ (0.82) $ 0.81 $ 0.04 $ 1.54 Diluted $ (0.82) $ 0.80 $ 0.04 $ 1.52 Weighted average shares outstanding: Basic 7,710 7,755 7,709 7,772 Diluted 7,710 7,830 7,799 7,853 Cash dividends declared per common share $ 0.42 $ 0.39 $ 0.84 $ 0.78

Explanation / Answer

Profitability ratios:

3 months ended

6 Months ended

31-Dec-17

31-Dec-16

31-Dec-17

31-Dec-16

Gross margin ratio

(Gross margin x 100 /Total revenue)

Gross margin

17854

15925

34114

30009

Total revenue

28918

25826

53456

47754

Gross margin ratio

61.74009268

61.66266553

63.81697097

62.84080915

(Gross margin x 100 /Total revenue)

Operating profit ratio

Operating income

8679

7905

16387

14620

Total revenue

28918

25826

53456

47754

Operating profit ratio

30.01244899

30.60868892

30.65511823

30.61523642

(Operating income x 100 / Total revenue)

Liquidity ratios:

31-Dec-17

30-06-17

Total current assets

167633

162696

Total current liabilities

58099

55745

Current ratio (Total current assets / Total current liabilities)

2.885299231

2.918575657

Acid test ratio

Total current assets less inventories

165630

160515

Total current liabilities

58099

55745

Acid test ratio (Current assets less inventories / current liabilities)

2.850823594

2.879451072

Solvency ratio:

Capital gearing ratio:

Equity shareholders' funds

78360

87711

Long term debt

73348

76073

Capital gearing ratio (Equity shareholders' fund / long term debt fund)

1.068331788

1.152984633

Debt to equity ratio

Long term debt

73348

76073

Equity shareholders' funds

78360

87711

Debt to equity ratio (Debt fund / Equity fund)

0.936038795

0.867314248

Activity / efficiency ratio

3 months ended

6 Months ended

31-Dec-17

31-Dec-16

31-Dec-17

31-Dec-16

Total revenue

28918

25826

53456

47754

Average inventories

2092

2092

2092

2092

Inventories turnover ratio (Total revenue / average inventories)

13.82313576

12.34512428

25.55258126

22.82695985

Profitability ratios:

3 months ended

6 Months ended

31-Dec-17

31-Dec-16

31-Dec-17

31-Dec-16

Gross margin ratio

(Gross margin x 100 /Total revenue)

Gross margin

17854

15925

34114

30009

Total revenue

28918

25826

53456

47754

Gross margin ratio

61.74009268

61.66266553

63.81697097

62.84080915

(Gross margin x 100 /Total revenue)

Operating profit ratio

Operating income

8679

7905

16387

14620

Total revenue

28918

25826

53456

47754

Operating profit ratio

30.01244899

30.60868892

30.65511823

30.61523642

(Operating income x 100 / Total revenue)

Liquidity ratios:

31-Dec-17

30-06-17

Total current assets

167633

162696

Total current liabilities

58099

55745

Current ratio (Total current assets / Total current liabilities)

2.885299231

2.918575657

Acid test ratio

Total current assets less inventories

165630

160515

Total current liabilities

58099

55745

Acid test ratio (Current assets less inventories / current liabilities)

2.850823594

2.879451072

Solvency ratio:

Capital gearing ratio:

Equity shareholders' funds

78360

87711

Long term debt

73348

76073

Capital gearing ratio (Equity shareholders' fund / long term debt fund)

1.068331788

1.152984633

Debt to equity ratio

Long term debt

73348

76073

Equity shareholders' funds

78360

87711

Debt to equity ratio (Debt fund / Equity fund)

0.936038795

0.867314248

Activity / efficiency ratio

3 months ended

6 Months ended

31-Dec-17

31-Dec-16

31-Dec-17

31-Dec-16

Total revenue

28918

25826

53456

47754

Average inventories

2092

2092

2092

2092

Inventories turnover ratio (Total revenue / average inventories)

13.82313576

12.34512428

25.55258126

22.82695985

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