26 May Question Find these ratios, providing the following info
Question
Find these ratios, providing the following information for each; Formula (express the ratio in words), a detailed calculation (actual numbers from financial statements used for the calculation), final number (final result of the detailed calculation) and explanation of why ratio is important:
Efficiency Ratio: Receivable Turnover
Financial Leverage Ratio: Debt/Equity Ratio
Liquidity Ratio: Current Ratio
Liquidity Ratio: Quick Ratio
Profitability Ratio: Return on Equity
Profitability Ratio: Return on Assets
Profitability Ratio: Gross Margin %
Profitability Ratio: Net Profit Margin
Financial information has been attached.
Assumptions:
- At the beginning of 1999, CanGo purchased the online gaming company. This purchase was for cash, paid for through the proceeds of the IPO and results in goodwill.
- 90% of the online book sales comes from JIT, the other 10% through the inventory which CanGo possesses. 100% of the CD/DVD/MP3 come through CanGo inventory. The result is that 80% of ALL sales is JIT and 20% is inventory.
- There is one warehouse for shipping of books and one plant for manufacturing.
- There are three divisions: a CD/DVD/MP3 division, an online gaming division and a books division. All manufacturing takes place in the CD/DVD/MP3 division.
- The IPO takes place at the beginning of 1999.
- The CD/DVDs were customized beginning in 1998. The MP3 players were built beginning in the start of 1999.
- The online gaming company was purchased for $30,000,000 and both Elizabeth and Andrew initiated the process.
- The company begins in 1996, has a VC infusion in 1997 and 1998. It shows a profit in 1998 and 1999. Its only profitable division is the online book sales division.
- It has some type of international operations, hence the need for a “translation gain or loss” in owner’s equity.
- It has an extraordinary loss from fire and a sale of a segment of its business in 1999.
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