RATIO ANALYSIS

Question (12-52)
Current Ratio = Current assets / Current Labilits
Current Assets =
37103+455153+592530+70903+189256+1458949+554677+110772+13815+151561
= $3634719
Current Labilits = 249454+504065+15189+483120+18384
= 1270212
Current Ratio =2= 2 :1
Inventory ratio = cost of goods sold/ Average stock
Average stock = (O/P+ C/L)/2
Inventory ratio = 4542870/ 359901
1= 1:1
Average collection period = Average accounts receivable *365 /Annual credit
sales
365/3375050=108 dy

Question (12-53)
Solvency ratio
Debt equity ratio = long term debts/share holders
1505954/318199= 4.7
Long term debts = Debentures + Long term loans
Shareholders Funds = Equity Share Capital + Preference Share Capital +
Reserves and Surplus Fictitious Assets

Shareholders Funds = 3975762-3634719=341043

Question (12-54)
Gross Profit Ratio = Gross Profit/Net Sales 100
3375050/5132768*100

=65%
Net Profit Ratio = Net profit / Net Sales 100
=65%
Operating Ratio = (Cost of Sales + Operating Expenses)/ Net Sales 100
3375050+454270/5132768*100
=75%
Return on Investment
Employed 100

= Profit before Interest and Tax/Capital

=589898/(1505954+318199)*100
=589898/1824153*100
=32%

Question (12-51)
Common size statement for Hershey
Assets
Current assets, AR, invt, pre paid,

7881832

Liabilities
Ap, Accur liab, IT, long term debt
equity

2888982
911121

7881832

Common size statement express= 166301/7881832*100=2%

Changes in comment interest percentage= 2%