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Submitted By selina891212

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Words 1608

Pages 7

Pfizer Inc., short-term (operating) activity ratios

Ratio | Description | The company | Inventory turnover | An activity ratio calculated as revenue divided by inventory. | Pfizer Inc.'s inventory turnover improved from 2010 to 2011 but then slightly deteriorated from 2011 to 2012 not reaching 2010 level. | Receivables turnover | An activity ratio equal to revenue divided by receivables. | Pfizer Inc.'s receivables turnover improved from 2010 to 2011 but then slightly deteriorated from 2011 to 2012 not reaching 2010 level. | Payables turnover | An activity ratio calculated as revenue divided by payables. | Pfizer Inc.'s payables turnover increased from 2010 to 2011 but then declined significantly from 2011 to 2012. | Working capital turnover | An activity ratio calculated as revenue divided by working capital. | Pfizer Inc.'s working capital turnover improved from 2010 to 2011 and from 2011 to 2012. | Average inventory processing period | An activity ratio equal to the number of days in the period divided by inventory turnover over the period. | Pfizer Inc.'s average inventory processing period improved from 2010 to 2011 but then slightly deteriorated from…...

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...Oracle Microsoft Notes: Comparison between the two companies' ratios Earning per share As given in the income statement $1.69 $2.73 Cannot compare due to a different amount of shares outstanding. Current ratio Current assets $39,174 = 2.76 $74,918.00 = 2.60 Current liabilities $14,192 $28,774.00 Gross Profit Ratio Gross profit amount $442 = 1.2% $1,637 = 2.3% Microsoft Sales (13940) - cost of revenue (15,577) Net Sales $35,622 $69,943 "Oracles Sales(24,031) -Operating Expenses (23,589) " Profit margin ratio Net income $8,457 = 23.7% $23,150 = 33.1% Profit ratio Net Sales $35,622 $69,943 Inventory Turnover Cost of goods sold $442 = 1.6 $1,637 1.6 Oracle 303+259/2 Average Inventory $281 $1,056 Microsoft 1372+740/2 Days in Inventory 365 days 365 = 232 365 = 235 Inventory turnover 1.6 days 1.6 days Receivable Turnover Ratio Net credit sales $6,579 = 0.99 $13,940 = 0.93 Average Net Receivables $6,628 $14,987 Average Collection Period 365 365 = 72 days 365 = 74 days Receivable Turnover Ratio 0.99 0.93 Assets Turnover Ratio Net Sales $6,579 = 0.10 $13,940 = 0.14 Average Total Assets $67,556 $97,408 Microsoft 108,704+ 86,113 /2 Oracle $ 73,535 + ...

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...Ratio Formula Current Assets Current Liabilities Short term Investments Current Receivables Current Liabilities Net sales Average accounts receivable Cost of goods sold Average inventory 365 365 Net Sales Average total assets Total liabilities Total assets Total equity Total assets Total liabilities Total equity Income before interest expense and income taxes Interest Expense Net Income Net Sales Cost of goods sold Net Sales Net Income Average total assets Net income Preferred dividents Average common stockholders equity Net Sales Measure of Short‐term debt‐paying ability (2:1 guideline) Immediate short‐term debt‐paying ability (1:1 guideline) Efficiency of collection (bigger is better) Efficiency of inventory management (higher is better) Liquidity of receivables (not exceeding 1 1/3 times the days Liquidity of inventory Efficiency of assets in producing sales Creditor financing and leverage (1 is all debt, .50 means half of the assets are through debt) Owner financing Debt versus equity financing Protection in meeting interest payments (large ratio means less risky to creditors) Net income in each sales dollar (10‐15% for appliance and 1% or 2% for supermarket) Gross margin in each sales dollar Overall profitability of assets Profitability of owner investment Liquidity and Efficiency Current Ratio Acid‐test ratio Accounts receivable turnover Inventory turnover Days’ sales uncollected ......

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... RATIO ANALYSIS: Fundamental Analysis has a very broad scope. One aspect looks at the general (qualitative) factors of a company. The other side considers tangible and measurable factors (quantitative). This means crunching and analyzing numbers from the financial statements. If used in conjunction with other methods, quantitative analysis can produce excellent results. Ratio analysis isn't just comparing different numbers from the balance sheet, income statement, and cash flow statement. It's comparing the number against previous years, other companies, the industry, or even the economy in general. Ratios look at the relationships between individual values and relate them to how a company has performed in the past, and might perform in the future. MEANING OF RATIO: A ratio is one figure express in terms of another figure. It is a mathematical yardstick that measures the relationship two figures, which are related to each other and mutually interdependent. Ratio is express by dividing one figure by the other related figure. Thus a ratio is an expression relating one number to another. It is simply the quotient of two numbers. It can be expressed as a fraction or as a decimal or as a pure ratio or in absolute figures as “ so many times”. As accounting ratio is an expression relating two figures or accounts or two sets of account heads or group contain in the financial statements. MEANING OF RATIO ANALYSIS: Ratio......

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...|FINAL PROJECT RATIOS | LIQUIDITY AND ACTIVIY Current Ratio measures the ability of a firm to pay its short-term debts. The formula is: |Current Ratio |= |Current Assets | | | |Current Liabilities | Quick (Acid-Test) Ratio measures the immediate ability of a firm to pay its short-term debts. The formula is: |Current Ratio |= |Cash + Marketable Securities + Current Receivables | | | |Current Liabilities | Accruals ratio measures the amount of accounts receivables to cover the accounts payable. The formula is: |Accruals Ratio |= |Accounts Receivables | | | |Accounts Payables | Cash Flow Yield measures ability to generate operating cash flows in relation to NI (the most important liquidity ratio). The formula is: |Cash Flow Yield |= |Net cash provided by | | ...

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...Profitability ratios measure the company's use of its assets and control of its expenses to generate an acceptable rate of return Gross margin, Gross profit margin or Gross Profit Rate[7][8] [pic] OR [pic] Operating margin, Operating Income Margin, Operating profit margin or Return on sales (ROS)[8][9] [pic] Note: Operating income is the difference between operating revenues and operating expenses, but it is also sometimes used as a synonym for EBIT and operating profit.[10] This is true if the firm has no non-operating income. (Earnings before interest and taxes / Sales[11][12]) Profit margin, net margin or net profit margin[13] [pic] Return on equity (ROE)[13] [pic] Return on investment (ROI ratio or Du Pont Ratio)[6] [pic] Return on assets (ROA)[14] [pic] Return on assets Du Pont (ROA Du Pont)[15] [pic] Return on Equity Du Pont (ROE Du Pont) [pic] Return on net assets (RONA) [pic] Return on capital (ROC) [pic] Risk adjusted return on capital (RAROC) [pic] OR [pic] Return on capital employed (ROCE) [pic] Note: this is somewhat similar to (ROI), which calculates Net Income per Owner's Equity Cash flow return on investment (CFROI) [pic] Efficiency ratio [pic] Net gearing [pic] Basic Earnings Power Ratio[16] ......

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