Refer to Campbell Soup Company\'s financial Campbell Soup CASE 1-5 Finencial Saa

Question

Refer to Campbell Soup Company's financial Campbell Soup CASE 1-5 Finencial Saatement Ratio Compat Compute the following taties for Year 11 Asset utilization ratios o. Accounts receivable turnover Capital structure and selvency ratios e Tetal debt to total equity r Fined assets turnover s Total assets turnover Market measures (Campbell's stock price per share is 46.73 for Year 11) w. Dividend payout rate Price-to-book ratio Operating profit margin ratio For simplicity in computing hiliratien ratios, use end-of year values and ot average values

Explanation / Answer

In addition to balance sheet, income statement is also required to calculate some ratios. Since, the question requires calculation of multiple ratios. I have calculated the first 6 ratios (from a to f). From Part g onwards, income statement is needed to determined the value of EBIT, Gross Profit, Net Profit, etc.

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Liquidity Ratios:

Part a)

The formula for calculating current ratio is given as below:

Current Ratio = Current Assets/Current Liabilities

Using the values provided in the question in the above formula, we get,

Current Ratio = 1,518.5/1,278 = 1.19

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Part b)

The value of acid-test ratio is arrived as below:

Acid-Test Ratio = (Total Current Assets - Inventories)/Total Current Liabilities

Using the values given in the question in the above formula, we get,

Acid Test Ratio = (1518.5 - 706.7)/1,278 = .64

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Part c)

The number of days to sell inventory is calculated as below:

Number of Days to Sell Inventory = 365/Inventory Turnover Ratio

Using the information provided in the question in the above formula, we get,

Number of Days to Sell Inventory = 365/5.80 = 62.93 days

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Part d)

The average collection period is calculated as below:

Average Collection Period = 365/Accounts Receivables Turnover Ratio

Using the values provided in the question, we get,

Average Collection Period = 365/11.76 = 31.04 days

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Capital Structure and Solvency Ratios:

Part e)

The value of total debt to total equity ratio is arrived as below:

Total Debt/Total Equity = 2,355.6/1,793.4 = 1.31

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Part f)

The value of long term debt to equity is determined as follows:

Long Term Debt/Equity = 772.6/1,793.4 = .43

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