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Homework answers / question archive / Regarding to the financial statements given; calculate the liquidity, financial structure and profitability ratios

Regarding to the financial statements given; calculate the liquidity, financial structure and profitability ratios

Finance

Regarding to the financial statements given; calculate the liquidity, financial structure and profitability ratios. (2x8=16 pts.) Interprete the results with comparison to the reference values. (2x8=16 pts.) HONDA Motor Company Balance Sheet 2019 ACTIVE PASSIVE TOTAL CURRENT ASSETS 6.8279 TOTAL CURRENT LIABILITIES Total inventories 1.1529 TOTAL LIABILITIES Cash & Short term investments 1.8069 TOTAL EQUITY TOTAL ASSETS 8.2775 6.0508 8.3165 3.6965 HONDA Motor Company Income Statement 2019 TOTAL REVENUE 3.200$ Total Operating Expenses (2.0005) Operating Income 300$ Net Income Before Taxes 1.500$ NET INCOME 1.490$

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Liquidity ratios

Current Ratio = Current Asset / Current liabilities = 1.13

Quick Ratio = Current Asset - Inventories / current liability = 0.93

Financial Structure ratios

Debt to Equity Ratio = Debt / Equity where debt = total liability - current liability = 2266.

Therefore , debt / equity ratio = 2266/ 3696 = 0.61

again, Debt to total asset ratio = 2266/8277 = 0.27

Lastly, the profitability ratios

Operating profit margin = operating profit / sales or revenue = 300/3200 = 9%

Net profit margin = Net Income / sales or revenue =1490/ 3200 = 46%

Return on equity = Net Income / Equity = 1490 /3696 = 40%.

For the part B please provide the reference values for comparison.

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