is the EPS for this company? Computational Problems 15-1 PGJ is a large producer
ID: 2656387 • Letter: I
Question
is the EPS for this company? Computational Problems 15-1 PGJ is a large producer of food products. In 2012, the percentage breakdown of revenues and profits was as follows: 438 Revenues(%) Profits (%) Packaged foods 28 19 13 Processed meat Food service-other 100 100 International operations account for about 22 percent of sales and 17 percent of operating proft For the 2008-2012 fiscal years, the number of shares outstanding in milns) and selected income statement data were in millions of dollars) as follows: Net Income 439 Shares After Oper Inc. Cap. Int. Before Year Revenues Exp. Deprec.Exp Tax Tax 4993 4997 49.43 49.45 51.92 2008 $5,472 5,960 6,601 8,351 8,256 $524 534 565 694 721 S121 262 87 283 266 $452 470 473 $232 S77 78 255 221 2010 131 133 50 152 139 2012 535 a. For each year calculate operating income as a percentage of revenues. b. Net profits after tax as a percentage of revenues. 440Explanation / Answer
a. Operating income as a percentage of revenue would by operating margin, which would be as follows for the following years:
Formula for that would be: Operating margin = Operating income/ Revenue *100
2008 = 524/5472*100 = 9.58%
2009 = 534/5960*100 = 9.58%
2010 = 565/6601*100 = 8.56%
2011 = 694/8351*100 = 8.31%
2012 = 721/8256*100 = 8.73%
b. Net profit after tax as a percentage of revenue would by net profit margin, which would be as follows for the following years:
Formula: Net profit after tax/Revenue *100
2008 = 232/5472*100 = 4.24%
2009 = 256/5960*100 = 4.30%
2010 = 255/6601*100 = 3.86%
2011 = 221/8351*100 = 2.65%
2012 = 289/8256*100 = 3.5%
You can also refer to the below table for reference, I have created this table in MS Excel
---------------------------------------------------------------------------------------------------------------------------------
C. After-tax profit per share outstanding would be:
Formula = Net profit after tax / no of shares outstanding
2008 - 232/49.93 = $4.64
2009 - 256/49.97 = $5.12
2010 - 255/49.43 = $5.15
2011 - 221/49.45 = $4.46
2012 - 289/51.92 = $5.56
-------------------------------------------------------------------------------------------------------------------------------
d Ratio of current assets to current liabilities is also called current ratio
Formula: Current ratio= Current asest/ current liabilities
2008 - 1736/845 = 2.05 times
2009 - 1951/1047 = 1.86
2010 - 2019/929 = 2.17
2011 - 2254/1215 = 1.85
2012 - 2315/1342 = 1.72
-------------------------------------------------------------------------------------------------------------------------------------
e Long term debt as a percentage of common equity
2008 - 251/1321 = 0.19
2009 - 255/1480 = 0.17
2010 - 391/1610 = 0.24
2011 - 731/1626 = 0.44
2012 - 736/1872 = 0.39
------------------------------------------------------------------------------------------------------------
f Book value per share = Common equity/ no of shares outstanding
2008 - 1321/49.93 = 26.45
2009 - 1480/49.97 = 29.61
2010 - 1610/49.43 = 32.57
2011 - 1626/49.54 = 32.88
2012 - 1872/51.92 = 36.05
-----------------------------------------------------------------------
Roe = Net income or proft after tax / Total shareholders equity *100
Roa = Net income or proft after tax / Total assets *100
-------------------------------------------------------------------------------------------------------------------------------
i Leverage would be the ratio of total liabilities to total assets
So before that, we will have to calculate the value of Total liabilities which would be
Total Liabilities = Total Assets - Common equity
---------------------------------------------------------------------------------------------------------------------------------
J net income margin would be the same as After-tax profit as a percentage of revenue which is already calculated in the question b
Please refer question B
------------------------------------------------------------------------------------------------------------------------------------
K for calculating the turnover (Assuming inventory turnover among other turnover ratios) value of inventory is required which is not given in the question
-------------------------------------------------------------------------------------------------------------------------------
L EBIT is similar to Operating income
So EBIT can also be called operating income which is nothing but (Income before interest and tax)
operating income is given for all the periods
-------------------------------------------------------------------------------------------------------------------------------
M. Income ratio is Debt to income ratio
This can be calculated as =Long term debt / Profit after tax *100
255%
This means the company has more long-term debt than the income it is generating
---------------------------------------------------------------------------------------------------------------------------
N. Operating efficiency = operating expenses/Revenue *100
Operating expenses = Revenue - operating income
---------------------------------------------------------------------------------------------------------------------------
Based upon the above calculations, it can be inferred that the company is doing good and having sound operations
2008 2009 2010 2011 2012 Revenue 5472 5960 6601 8351 8256 Operating income 524 534 565 694 721 Operating income As a % of revenue 9.58% 8.96% 8.56% 8.31% 8.73% Net profits After tax 232 256 255 221 289 PaT As a % of revenue 4.24% 4.30% 3.86% 2.65% 3.50%Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.