2014 2013 2012 2011 2010 2009 Revenue 3350 3313 2844 2795 2492 2159 EBIT -8 311
ID: 2763281 • Letter: 2
Question
2014
2013
2012
2011
2010
2009
Revenue
3350
3313
2844
2795
2492
2159
EBIT
-8
311
255
242
211
155
Interest
36
62
64
57
47
45
Taxes
-17.6
59
45
42
39
34
Net Profit
-26.4
188
144
141
124
75
Current Assets
668
468
490
434
391
422
Net Fixed Assets
922
779
752
679
609
535
Current Liabilities
679
364
347
301
275
319
Long-term Debt
235
158
296
310
318
314
Shareholders’
Equity
697.6
724
598
501
406
323
Number of Stores
239
220
211
184
170
156
Employees
13,089
11,535
9,834
9730
9034
7345
Its 2014 income statement is the following:
Revenue
3350
Selling, General and Administrative
1898
Depreciation
1460
EBIT
-8
Interest Expenses
36
Taxable Income
-44
Income taxes
-17.6
Net Income
-26.4
Dividend
0
What appear to be the problems of this company? Please use financial ratio analysis to justify your answers.
What would you suggest to fix the problems?
2014
2013
2012
2011
2010
2009
Revenue
3350
3313
2844
2795
2492
2159
EBIT
-8
311
255
242
211
155
Interest
36
62
64
57
47
45
Taxes
-17.6
59
45
42
39
34
Net Profit
-26.4
188
144
141
124
75
Current Assets
668
468
490
434
391
422
Net Fixed Assets
922
779
752
679
609
535
Current Liabilities
679
364
347
301
275
319
Long-term Debt
235
158
296
310
318
314
Shareholders’
Equity
697.6
724
598
501
406
323
Number of Stores
239
220
211
184
170
156
Employees
13,089
11,535
9,834
9730
9034
7345
Explanation / Answer
Calculation of ratios related to income statement and balance sheet for 2014:
Profit margin ratio (after tax) = Net income after tax / Net sales
= -$26.4 / $3,350
= -0.789%
Return on stockholder’s equity (after tax)
= Net income for the after taxes / Average stockholder’s equity during the year
= -$26.4 / $697.6
= - 0.03784
Working capital = Current assets – Current liabilities
= $668 - $679
= -$11
Current ratio = Current assets / current liabilities
= $668 /$679
= 0.9838
Debt to equity ratio:
= Total liabilities / Shareholders equity
= $679 +$235 / $697.6
= 1.31
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