Details of a company

1. Page
16
8B16B007
EXHIBIT
TN-5:
COMPUTATION
OF
VARIOUS
RATIOS
Ratio
Year
1
Calculation
Year
2
Calculation
Year
3
Calculation
Industry
Average
of
Ratio
Given
in
Exhibit
3
Current
ratio
660,000
260,000
2.54
3,100,000
1,728,000
1.79
4,456,000
2,780,000
1.6
2.30
Acid
test
ratio
340,000
260,000
1.31
1,600,000
1,728,000
0.93
2,206,000
2,780,000
0.79
1.20
Receivable
turnover
ratio
1,800,000
300,000
6
4,320,000
900,000
4.8
7,200,000
1,800,000
4
7
Receivable
days
365
6
61
365
4.8
76
365
4
91
52
Inventory
turnover
ratio
1,240,000
320,000
3.875
2,832,000
910,000
3.1
4,800,000
1,875,000
2.56
4.85
Inventory
days
365
3.875
94
365
3.1
117
365
2.56
143
75
Long-term
debt
to
total
capital
736,000
2,560,000
29%
1,236,000
5,600,000
22%
2,500,000
9,156,000
27%
24%
Debt-to-equity
ratio
736,000
1,200,000
0.61
1,236,000
1,600,000
0.77
2,500,000
2,000,000
1.25
0.35
Gross
margin
ratio
760,000
2,000,000
38%
1,968,000
4,800,000
41%
3,200,000
8,000,000
40%
40%
Net
margin
ratio
364,000
2,000,000
18.2%
672,000
4,800,000
14%
840,000
8,000,000
10.5%
18%
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This Teaching Note is authorized for use only by Prantik Ray, Xavier Labour Relations Institute (XLRI) until July 2018. Copying or posting is an infringement of copyright.
Permissions@hbsp.harvard.edu or 617.783.7860.

2. Page
17
8B16B007
EXHIBIT
TN-5
(CONTINUED)
Return
on
equity
364,000
1,564,000
23%
672,000
2,636,000
25%
840,000
9,156,000
22%
22%
Return
on
fixed
assets
364,000
1,900,000
19.16%
672,000
2,500,000
27%
840,000
4,700,000
17.87%
24%
Return
on
total
assets
364,000
2,560,000
14.22%
672,000
5,600,000
12%
840,000
9,156,000
9%
10%
Interest
coverage
ratio
580,000
60,000
9.67
1,118,000
158,000
7.08
1,540,000
340,000
4.53
10
Total
assets
turnover
ratio
(Total
revenue
÷
Total
assets)
2,000,000
2,560,000
=
0.78
4,800,000
5,600,000
0.86
8,000,000
9,156,000
0.87
1.1
Fixed
assets
turnover
ratio
(Revenue
÷
Fixed
assets)
2,000,000
1,900,000
1.05
4,800,000
2,500,000
1.92
8,000,000
4,700,000
1.70
2
Current
assets
turnover
ratio
(Revenue
÷
Current
assets
2,000,000
660,000
3.03
4,800,000
3,100,000
1.54
8,000,000
4,456,000
1.79
3
Working
capital
turnover
ratio
(Revenue
÷
Working
capital)
2,000,000
400,000
5
4,800,000
1,372,000
3.5
8,000,000
1,676,000
4.77
8
Source:
Computed
by
authors.
D
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P
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This Teaching Note is authorized for use only by Prantik Ray, Xavier Labour Relations Institute (XLRI) until July 2018. Copying or posting is an infringement of copyright.
Permissions@hbsp.harvard.edu or 617.783.7860.