# financial ratios for Chase

Resource:  Financial Statements for (JP Morgan Chase

Review chases financial statements from the past three years.

Calculate the financial ratios for Chase

and then interpret those results against  3 banking industry companies historical data as well as industry benchmarks:

• Compare the financial ratios with each of the preceding three (3) years (e.g. 2014 with 2013; 2013 with 2012; and 2012 with 2011).
• Compare the calculated financial ratios against the industry benchmarks for the industry of your assigned company.

Write an apa with references 750 word summary of your analysis.

Show financial calculations where appropriate

The attached the professor sent so just in case it may be useful

## #4.2

 4.2. Liquidity ratios: Flying Penguins Corp. has total current assets of \$11,845,175, current liabilities of \$5,311,020, and a quick ratio of 0.89. What is its level of inventory? Total current assets \$ 11,845,175.00 Total current liabilities \$ 5,311,020.00 Quick ratio 0.89 Quick ratio = (Total Current assets – Inventory) Current Liabilities Inventory = Total Current assets -(Quick ratio * Current Liabilities) Inventory = \$ 7,118,367.20 Check: Quick ratio= 0.89

## #4.3

 4.3. Efficiency ratio: If Newton Manufacturers have an accounts receivable turnover of 4.8 times and net sales of \$7,812,379, what is its level of receivables? Accounts receivable turnover 4.8 times Net sales \$ 7,812,379 A/R Turnover = Net sales A/R A/R = Net sales A/R Turnover A/R = 1,627,578.96

## #4.5

 4.5. Efficiency ratio: Sorenson Inc. has sales of \$3,112,489, a gross profit margin of 23.1 percent, and inventory of \$833,145. What are the company’s inventory turnover ratio and days’ sales in inventory? Sales \$ 3,112,489 Gross profit margin 23.10% Inventory \$ 833,145 Inventory turnover ratio = Cost of Goods Sold/Inventory Day’s sales in inventory = 365 days/Inventory turnover ratio Cost of goods sold = \$ 2,393,504 Inventory turnover ratio 2.87 Day’s sales in inventory 127.05 days

## #4.7

 4.7. Leverage ratios: Norton Company has a debt-to-equity ratio of 1.65, ROA of 11.3 percent, and total equity of \$1,322,796. What are the company’s equity multiplier, debt ratio, and ROE? Debt-to-equity ratio 1.65 ROA 11.30% Total equity \$ 1,322,796 Equity multiplier = Total Assets/Total Equity Debt ratio= Total Debt/Total Assets ROE = ROA * Equity multiplier Debt-to-equity ratio = Total Debt/Total equity –>Total Debt = Debt-to-equity ratio*Total equity Total Debt= 2,182,613.40 Total Assets = Total Debt + Total Equity = 3,505,409.40 Equity multiplier= \$ 2.65 Debt ratio = 62.26% ROE 29.95%

## #4.8

 4.8. DuPont equation: The Rangoon Timber Company has the following relationships: Sales/Total assets = 2.23; ROA = 9.69%; ROE = 16.4% What are Rangoon’s profit margin and debt ratio? Sales/Total Assets= 2.23 ROA= 9.69% ROE= 16.40% Profit margin = Net Income/Sales Debt ratio = Total Debt/Total Assets ROA = Net Income/Total Assets ROE = Net Income/ Total equity Based on the Du Pont Breakdown: ROA = (Net Income/Sales)*(Sales/Total Assets) and ROE = (Net Income/Sales)*(Sales/Total Assets)*(Total Assets/Equity) ROA Breakdown: 9.69% =(Net Income/Sales)* 2.23 ==>(Net Income/Sales) = 4.35% Profit Margin = 4.35% ROE= 9.69% *TA/Equity 16.40% =(TA/Equity) X 9.69% ==>(TA/Equity)= 1.692 ==>Equity/Total Assets= 1/(TA/Equity) ==>Equity/Total Assets= 59.09% Debt/Total Assets = 1-(Equity/Total Assets)= 40.91% Alternative way: TA/Equity = (ROE/ROA)= 1.692 Equity/TA=1/(TA/EQ) 59.09% Debt /TA= 1- (E/TA) 40.91%

## #4.12

 4.12 Market value ratios: Rockwell Jewelers has announced net earnings of \$6,481,778 for this year. The company has 2,543,800 shares outstanding, and the year-end stock price is \$54.21. What are the company’s earnings per share and P/E ratio? Net earnings 6,481,778 # of shares outstanding 2,543,800 Year-end stock price \$54.21 Earnings per share 2.55 P/E ratio \$21.27

## #4.11

 4.11 Benchmark analysis: Trademark Corp.’s financial manager collected the following information for its peer group so it can compare its own performance against the peers. Ratios Trademark Peer Group DSO 33.5 days 27.9 days Total assets turnover 2.3 X 3.7 X Inventory turnover 1.8 X 2.8 X Quick ratio 0.6 X 1.3 X a .Explain how Trademark is doing relative to its peers. b. How do the industry ratios help Trademark’s management? a. Trademark is lagging behind its peer group in all four areas. It takes, on average, about 6 more days to collect its receivables, has a slower inventory and total assets turnover, and lower liquidity than its peers. b. The industry ratios help Trademark’s management by giving them a benchmark representing the average performance in the industry, against which they can compare the firm’s performance. Accordingly, corrective action can be taken by determining how much the firm’s assets and liabilities need to be changed to match the peer group.

## #4.14

 4.14 Liquidity ratios: Laurel Electronics has a quick ratio of 1.15, current liabilities of \$5,311,020, and inventories of \$7,121,599. What is the firm’s current ratio? Quick ratio 1.15 Current liabilities \$ 5,311,020 Inventories \$ 7,121,599 Current ratio = Current assets/Current Liabilities Quick ratio =( Total Current Assets – Inventories)/ Current Liabilities ==> Total Current Assets = (Quick ratio * Current Liabilities)+Inventories ==> Total Current Assets = \$ 13,229,272 Current ratio= 2.49

## #4.16

 4.16 Efficiency ratio: Norwood Corp. currently has accounts receivable of \$1,223,675 on net sales of \$6,216,900. What are its accounts receivable turnover ratio and days’ sales outstanding? Accounts receivable \$ 1,223,675 Net sales \$ 6,216,900 Days’ sales outstanding = 365/Accounts receivable turnover Accounts receivable turnover = Net sales/Accounts receivable Accounts receivable turnover= 5.081 Days’ sales outstanding= 72 days

## #4.6

 4.6. Leverage ratios: Breckenridge Ski Company has total assets of \$422,235,811 and a debt ratio of 29.5 percent. Calculate the company’s debt-to-equity ratio and the equity multiplier. Total assets \$ 422,235,811 Debt ratio 29.50% Debt ratio = Total Debt / Total Assets –> Total Debt = Debt ratio * Total assets Debt-to-equity ratio = Total debt/Shareholder’s equity Equity Multiplier = Total Assets/Shareholder’s equity Shareholder’s equity = Total Assets – Total Debt Total Debt = 124,559,564.24 Shareholders’ equity = 297,676,246.76 Debt-to-equity ratio = 41.84% Equity Multiplier 1.42

## #4.30

 4.30 Blackwell Automotive’s balance sheet at the end of its most recent fiscal year shows the following information: Assets As of 3/31/2011 Liabilities and Equity Cash and marketable sec. \$23,015 Accounts payable and accruals \$163,257 Accounts receivable \$141,258 Notes payable \$21,115 Inventories \$212,444 Total current assets \$387,940 Total current liabilities \$184,372 Long-term debt \$168,022 Net plant and equipment \$711,256 Total liabilities \$352,394 Goodwill and other assets \$78,656 Common stock \$313,299 Retained earnings \$512,159 Total assets \$1,177,852 Total liabilities and equity \$1,177,852 In addition on, it was reported that the firm had a net income of \$156,042 on sales of \$4,063,589. a. What are the firm’s current ratio and quick ratio? b. Calculate the firm’s days’ sales outstanding (DSO), total asset turnover ratio, and fixed asset turnover ratio. Current ratio = Total current assets/Total current liabilities 2.10 times Quick ratio = (Total current assets – Inventory)/Total current liabilities 0.95 times Sales = 4,063,589 Net income = 156,042 Days’ sales outstanding = 365/Accounts receivables turnover 12.69 days Accounts receivables turnover = Sales/Accounts receivables 28.77 Total asset turnover = Sales/Total assets 3.45 times Fixed asset turnover = Sales/Fixed assets 5.71 times

## #4.32

 4.32 Ratio analysis: Refer to the information above for Nederland Consumer Products Company. Compute the firm’s ratios for the following categories and briefly evaluate the company’s performance from these numbers. a. Efficiency ratios b. Asset turnover ratios c. Leverage ratios d. Coverage ratios As Reported on Annual Income Statement 9/30/08 Net sales \$51,407 Cost of products sold \$25,076 Gross margin \$26,331 Marketing, research, administrative exp. \$15,746 Depreciation \$758 Operating income (loss) \$9,827 Interest expense \$629 Other nonoperating income (expense), net \$152 Earnings (loss) before income taxes \$9,350 Income taxes \$2,869 Net earnings (loss) \$6,481 As Reported on Annual Balance Sheet 9/30/08 Assets Liabilities and Equity Cash and cash equivalents 5,469 Accounts payable 3,617 Investment securities 423 Accrued and other liabilities 7,689 Accounts receivable 4,062 Taxes payable 2,554 Total inventories 4,400 Debt due within one year 8,287 Deferred income taxes 958 Prepaid expenses and other receivables 1,803 Total current assets 17,115 Total current liabilities 22,147 Property, plant, and equipment, at cost 25,304 Long-term debt 12,554 Less: Accumulated depreciation 11,196 Deferred income taxes 2,261 Net property, plant, and equipment 14,108 Other noncurrent liabilities 2,808 Net goodwill and other intangible assets 23,900 Total liabilities 39,770 Other noncurrent assets 1,925 Convertible class A preferred stock 1,526 Common stock 2,141 Retained earnings 13,611 Total shareholders’ equity (deficit) 17,278 Total assets 57,048 Total liabilites and shareholders’ equity 57,048 Efficiency ratios 2008 Inventory Turnover = Cost of goods sold/Inventory = 5.70 times Day’s Sales in Inventory = 365 days/Inventory turnover = 64.05 days Accounts Receivable Turnover = Net sales/Account receivable = 12.66 times Days’ Sales Outstanding = 365 Days/Account receivable turnover 28.84 days Asset turnover ratios Total Asset Turnover = Net sales/Total assets 0.90 times Fixed Asset Turnover = Net sales/Net fixed assets 3.64 times Leverage ratios Total Debt Ratio = Total debt/Total assets 0.70 Debt-Equity Ratio = Total debt/Total equity 2.30 Equity Multiplier = Total assets/ Total equity 3.30 times Coverage ratios Interest Coverage =Times Interest Earned = EBIT/Interest expense 15.62 times Cash Coverage = (EBIT + Depreciation)/Interest expense 16.83 times

## #4.31

 4.31 The following are the financial statements of Nederland Consumer Products Company reported for the fiscal year ended September 30, 2011. As Reported on Annual Income Statement 9/30/11 Net sales \$51,407 Cost of products sold \$25,076 Gross margin \$26,331 Marketing, research, administrative exp. \$15,746 Depreciation \$758 Operating income (loss) \$9,827 Interest expense \$629 Other nonoperating income (expense), net \$152 Earnings (loss) before income taxes \$9,350 Income taxes \$2,869 Net earnings (loss) \$6,481 As Reported on Annual Balance Sheet 9/30/11 Assets Liabilities and Equity Cash and cash equivalents 5,469 Accounts payable 3,617 Investment securities 423 Accrued and other liabilities 7,689 Accounts receivable 4,062 Taxes payable 2,554 Total inventories 4,400 Debt due within one year 8,287 Deferred income taxes 958 Prepaid expenses and other receivables 1,803 Total current assets 17,115 Total current liabilities 22,147 Property, plant, and equipment, at cost 25,304 Long-term debt 12,554 Less: Accumulated depreciation 11,196 Deferred income taxes 2,261 Net property, plant, and equipment 14,108 Other noncurrent liabilities 2,808 Net goodwill and other intangible assets 23,900 Total liabilities 39,770 Other noncurrent assets 1,925 Convertible class A preferred stock 1,526 Common stock 2,141 Retained earnings 13,611 Total shareholders’ equity (deficit) 17,278 Total assets 57,048 Total liabilites and shareholders’ equity 57,048 Calculate all the ratios (for which industry figures are available) for Nederland and compare the firm’s ratios with the industry ratios. Industry Ratios Nederland Consumer Products Co. Ratios Comment Current ratio 2.05 0.77 Weak Quick ratio 0.78 0.57 Weak Gross margin 23.90% 51.22% Much stronger Profit margin 12.30% 12.61% Slightly better Debt ratio 0.23 0.70 Highly leveraged with more short term debt Long-term debt to equity 0.98 0.73 Relatively less LTD Interest coverage 5.62 14.86 Much higher ROA 5.30% 11.36% Much higher ROE 18.80% 37.51% Much higher

## #4.34

 4.34 Nugent, Inc., has a gross profit margin of 31.7 percent on sales of \$9,865,214 and total assets of \$7,125,852. The company has a current ratio of 2.7 times, accounts receivable of \$1,715,363, cash and marketable securities of \$315,488, and current liabilities of \$870,938. a. What is Nugent’s level of current assets? b. How much inventory does the firm have? What is the inventory turnover ratio? c. What is Nugent’s days’ sales outstanding? d. If management wants to set a target DSO of 30 days, what should Nugent’s accounts receivable be? Sales \$ 9,865,214 Total assets \$ 7,125,852 Accounts receivable \$ 1,715,363 Cash and marketable securities \$ 315,488 Current liabilities \$ 870,938 Target DSO 30 days Gross profit margin 31.70% Current ratio 2.7 times a) Current ratio = Current assets/Current liabilities ==> Current assets = Current ratio * Current liabilities ==> Current assets = \$ 2,351,532.60 b) Total current assets = Cash and marketable securities + A/R + Inventory ==> Inventory = Total current assets -Cash and M/S – A/R Inventory = \$ 320,681.60 c) Days’ sales outstanding = 365/Accounts receivable turnover Accounts receivable turnover = Sales/Accounts receivable Accounts receivable turnover = \$ 5.75 DSO = 63.47 days d) Target DSO = 30 days Since, Days’ sales outstanding = 365/Accounts receivable turnover ==> Accounts receivable turnover = 365/DSO Accounts receivable turnover would have to be 12.1666666667 and since, Accounts receivable = Sales/Accounts receivabel turnover Accounts receivable would have to be 810,839.51 i.e. A/R would have to decline by \$ 904,523.49

## #4.35

 4.35 Recreational Supplies Co. has net sales of \$11,655,000, an ROE of 17.64 percent, and a total asset turnover of 2.89 times. If the firm has a debt-to-equity ratio of 1.43, what is the company’s net income? Net sales \$ 11,655,000 ROE 17.64% Total asset turnover 2.89 times Debt-equity ratio 1.43 What is the company’s net income? Equity multiplier = 1 + Debt-to-equity ratio 2.43 Return on equity = Net profit margin * Total Asset turnover * Equity multiplier ==> Net profit margin = Return on equity/(Total asset turnover * Equity multiplier) ==> Net profit margin = 2.51% Net income = Net sales * Net profit margin = \$ 292,756.63

## STP #4.1

 STP #4.1. Morgan Sports Equipment Company has accounts payable of \$1,221,669, cash of \$ 677,423, inventory of \$ 2,312,478, accounts receivable of \$845,113, and net working capital of \$2,297,945. What are the company’s current ratio and quick ratio? Accounts payable \$ 1,221,669 Cash \$ 677,423 Accounts receivable \$ 845,113 Inventory \$ 2,312,478 Net working capital \$ 2,297,945 Current ratio = Current assets / Current liabilities 2.50 Current assets = Cash + A/R + Inventory = \$ 3,835,014 Net working capital = Current assets – Current liabilities ==> Current liabilities = Current assets – Net working capital \$ 1,537,069 Quick ratio = (Current assets – iInventories)/Current liabilities= 0.99

## STP #4.2

 STP #4.2. Southwest Airlines, Inc., has total operating revenues of \$6.53 million on total assets of \$11.337 million. Their property, plant, and equipment, including their ground equipment and other assets, are listed at a historical cost of \$11.921 million, while the accumulated depreciation and amortization amount to \$3.198 million. What are the airline’s total asset turnover and fixed asset turnover ratios? Operating revenues \$ 6.53 million Total assets \$ 11.337 million Property, Plant, & Equipment (historical cost) \$ 11.92 million Accumulated depreciation and amortization \$ 3.198 million Total asset turnover = Operating revenues/Total assets = \$ 0.58 Fixed asset turnover = Operating revenues/Net fixed assets = 0.749

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