Search for a starbucks or any other famous company annual reports , review the r

Question

Search for a starbucks or any other famous company annual reports , review the reports and Calculate the following Ratios:

ROE - Return on equity

Current Ratio

Quick Ratio

Debt to equity ratio

Debt to total assets ratio

Accounts receivable turnover

Inventory turnover

Accounts payable turnover

Days sales in receivables

Days sales in inventory

Days purchases in payables

Total asset turnover

Fixed asset turnover

Gross profit margin percentage

Operating profit margin percentage

Net profit margin percentage

Explanation / Answer

Solution:

Amounts in millions

Calculated the ratios:

Earnings per share (EPS) = Net income – preferred dividends / Weighted average common shares outstanding

                                                = $14,694 /3207

                                                = $4.58

Therefore, EPS is $4.58.

Return on assets (ROA) = Net income / average assets

                                             = $14,694 / ($199,581 + $203,490)/2

                                            = $14,694 / $201,535.50

                                             = 0.07 or 7%

Therefore, ROA is 7%.

Return on equity (ROE) = Net income / Shareholder’s equity

                                             = $14,694 / $83,611

                                             = 0.18 or 18%

Therefore, ROE is 18%.

Current ratio= Current assets / Current liabilities

                         = $60,239 / $64,619

                        = 0.93

Therefore, current ratio is 0.93.

Quick ratio = Cash + Cash equivalents + Short term investments + Current receivables / Current liabilities

                      = $8,705 + $5,624 / $64,619

                      = 0.22

Therefore, quick ratio is 0.22.

Debt to equity ratio = Total liabilities / Total equity

                                     = $115,970 / $83,611

                                      = 1.39

Therefore, debt to equity ratio is 1.39.

Debt to total assets ratio = Total debt / Total assets

                                                 = $115,970 / $199,581

                                                = 0.58

Therefore, debt to total assets ratio is 0.58.

Accounts receivable turnover ratio = Net credit sales / Average accounts receivable

                                                                      = $478,614 / ($5,624 +$6,778)/2

                                                                      = $478,614 / $6,201

                                                                      = 77.18

Inventory turnover ratio = Cost of goods sold / Average inventory

                                                = $360,984 / $44,469

                                                = 8.12

Therefore, inventory turnover ratio is 8.12.

Total assets turnover ratio = Net sales / Average total assets

                                                     = $478,614 / ($199,581 + $203,490)/2

                                                     = $478,614 / $201,535.5

                                                = 2.37

Fixed assets turnover ratio = Net sales / Net fixed assets

                                                     = $478,614 / $110,171+$6,345

                                                     = $478,614 / $116,516

                                                    = 4.10

Note: 2016 financial statements taken from Walmart Company.

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