Charter Company
Charter Company
1. Calculate the following ratios for each year during the period 1980-1983. Comment on the trend indicated by each ratio with respect to the financial performance and condition of the Charter Company.
A) Profitability:
ROTA = EBIT/total assets
1980 = 145485/[(1728694+1746260)/2]= 8.37%
1981 = 155673/[(1541326+1746260/2] = 6.45%
1982 = 108180/[(1628046+1541326)/2] =6.83%
1983 = 133896/[(1813199+1628046)/2]=7.78%
B) Turnover: Accounts Receivables turnover ratio = Net Credit Sales/Average net receivables
1980 = 4563011/[(333071+367762)/2]=13.02%
1981 = 4966171/[(367762+375659)/2]=13.36%
1982 = 4017161/[(375659+327610)/2]=11.42%
1983 = 5656770/[(327610+340418)/2]=16.94%
Inventory Turnover ratio = Cost of sales and operating /avg. of total inventories
1980 = 4193275/[(348180+295571)/2]=13.03%
1981 = 4512215/[(295571+136687)/2]=20.88%
1982 = 3744462/[(136687+239749)/2]=19.89%
1983 = 5364820/[(239749+369716)/2]=17.61%
Return on Asset Ratio = Net Income/Average Total Assets
1980 = 50237/[(1728694+1746260)/2]=2.89%
1981 = 7717/[(1541326+1746260)/2]=0.47%
1982 = 35260/[(1628046+1541326)/2]=2.23%
1983 = 53895/[(1813199+1628046)/2]=3.13%
C) Liquidity: Current Ratio = Current Assets/Current Liabilities
1980 = 773662/535457=1.45%
1981 = 608945/459123=1.33%
1982 = 641876/540659=1.19%
1983 = 801727/700755=1.14%
Quick Ratio = Current Assets – total inventories/Current Liabilities
1980 = (773662-295571)/535457=0.89%
1981 = (608945-136687)/459123=1.03%
1982 = (641876-239749)/540659=0.74%
1983 = (801727-369716)/700755=0.62%
D) Solvency:
Debt Equity Ratio = Total Liabilities/Shareholder Equity
1980 = (1746260-677686)/677686=1.58%
1981 = (1541326-654581)/654581=1.35%
1982 = (1628046-640791)/640791=1.54%
1983 = (1813199-614127)/614127=1.95%
Capitalization Ratio = Long Term Debt/Long term debt + Shareholder Equity
1980 = (1746260-677686-535457)/(1746260-535457)=0.44%
1981 = (1541326-654581-459123)/(1541326-459123)=0.39%
1. Calculate the following ratios for each year during the period 1980-1983. Comment on the trend indicated by each ratio with respect to the financial performance and condition of the Charter Company.
A) Profitability:
ROTA = EBIT/total assets
1980 = 145485/[(1728694+1746260)/2]= 8.37%
1981 = 155673/[(1541326+1746260/2] = 6.45%
1982 = 108180/[(1628046+1541326)/2] =6.83%
1983 = 133896/[(1813199+1628046)/2]=7.78%
B) Turnover: Accounts Receivables turnover ratio = Net Credit Sales/Average net receivables
1980 = 4563011/[(333071+367762)/2]=13.02%
1981 = 4966171/[(367762+375659)/2]=13.36%
1982 = 4017161/[(375659+327610)/2]=11.42%
1983 = 5656770/[(327610+340418)/2]=16.94%
Inventory Turnover ratio = Cost of sales and operating /avg. of total inventories
1980 = 4193275/[(348180+295571)/2]=13.03%
1981 = 4512215/[(295571+136687)/2]=20.88%
1982 = 3744462/[(136687+239749)/2]=19.89%
1983 = 5364820/[(239749+369716)/2]=17.61%
Return on Asset Ratio = Net Income/Average Total Assets
1980 = 50237/[(1728694+1746260)/2]=2.89%
1981 = 7717/[(1541326+1746260)/2]=0.47%
1982 = 35260/[(1628046+1541326)/2]=2.23%
1983 = 53895/[(1813199+1628046)/2]=3.13%
C) Liquidity: Current Ratio = Current Assets/Current Liabilities
1980 = 773662/535457=1.45%
1981 = 608945/459123=1.33%
1982 = 641876/540659=1.19%
1983 = 801727/700755=1.14%
Quick Ratio = Current Assets – total inventories/Current Liabilities
1980 = (773662-295571)/535457=0.89%
1981 = (608945-136687)/459123=1.03%
1982 = (641876-239749)/540659=0.74%
1983 = (801727-369716)/700755=0.62%
D) Solvency:
Debt Equity Ratio = Total Liabilities/Shareholder Equity
1980 = (1746260-677686)/677686=1.58%
1981 = (1541326-654581)/654581=1.35%
1982 = (1628046-640791)/640791=1.54%
1983 = (1813199-614127)/614127=1.95%
Capitalization Ratio = Long Term Debt/Long term debt + Shareholder Equity
1980 = (1746260-677686-535457)/(1746260-535457)=0.44%
1981 = (1541326-654581-459123)/(1541326-459123)=0.39%