EXHIBIT MICRODRIVE INC.

: BALANCE SHEET ( MILLIONS

OF

DOLLARS)

December 31
1993 1992

Assets: Cash Marketable securities Account receivable Inventories Total current assets Net Plant and equipment Total assets 10 0 375 615 1,000 1,000 2,000 15 65 315 415 810 870 1,680

______________________________ Liabilities and Equity: Account payable Notes payable Accruals Total current liabilities Long-term bonds Total debt Preferred stock ( 400,000 shares) Common stock ( 50,000,000 shares) Paid-in capital Retained earnings Common equity Total liabilities and equity 60 110 140 310 754 1,064 40 50 80 766 896 2,000 30 60 130 220 580 800 40 50 80 710 840 1,680

EXHIBIT MICRODRIVE INC.: INCOME STATEMENT (MILLIONS

OF

DOLLARS)

Net sales Cost excluding depreciation Depreciation Total operating costs Earnings before interest and taxes (EBIT) Less interest Earnings before taxes (EBT) Taxes (40%) Net income before preferred dividends Preferred dividends Net income available to common stockholders Common dividends Addition to retained earnings Per-share data: Common stock price Earnings per share (EPS) Dividends per share (DPS)

1993 3,000.0 2,616.2 100.0 2,716.2 283.8 88.0 195.8 78.3 117.5 4.0 113.5 _____ 57.5 56.0

31 December 1992 2,850 2,497 90 2,587 263 60 203 81 122 4 118 ____ 53 65

23.00 2.27 1.15

24.00 2.36 1.06

LIQUIDITY RATIOS:

Current Ratio:
The current ratio is calculated by dividing current assets by current liabilities.

Current ratio = Current assets Current liabilities

= $ 1,000 $ 310 = 3.2 times.

Quick, or Acid Test, Ratio:
The quick, or acid test, ratio is calculated by deducting inventories from current assets and then dividing the remainder by current liabilities.

Quick, or acid test ratio =

Current assets - Inventories Current liabilities

= $ 385 $ 310 1.2 times

ASSET MANAGEMENT RATIOS:
Inventory Turnover:

The inventory turnover ratio is defined as sales divided by inventories. Inventory turnover ratio = Sales Inventories .

= $ 3,000 $ 615 4.9 times

Fixed Assets Turnover:
The fixed assets turnover ratio measures how effectively the firm uses its plant and equipment. It is the ratio of sales to net fixed assets.

Fixed assets turnover ratio = Sales Net fixed assets

.

= $ 3,000 $ 1,000 3.0 times

Total Assets Turnover:
The final asset management ratio, the total assets turnover ratio, measures the turnover of all of the firm’s assets; it is calculated by dividing sales by total assets.

Total assets turnover ratio =

Sales Total assets

.

= $ 3,000 $ 2,000 1.5 times

DEBT MANAGEMENT RATIOS:

Total Debt to Total Assets:
The ratio of total debt to total assets, generally called the debt ratio, measures the percentage of funds provided by creditors. Debt ratio = Total debt . Total assets

= $ 310 + $ 754 $ 2,000 = $ 1,064 $ 2,000 53.2 %

Time Interest Earned
The time-interest-earned (TIE) ratio is determined by dividing earnings before interest and taxes by the interest charges. The time-interest-earned ratio = EBIT . Interest charges = $ 283.8 $ 88 3.2 times

PROFITABILITY RATIOS:
Operating Profit Margin:
Operating Profit Margin ratio = EBIT Net Sales .

= $ 283.8 $ 2,000 14.2 %

Return on Total Assets:
The ratio of net income to total assets measures the return on total assets (ROA) after interest and taxes. Return on total assets = (ROA) Net income Total assets .

= $ 113.5 $ 2,000 5.7 %

Return on Common Equity:
The ratio of net income to common equity measures the return on common equity (ROE) or the rate of return on stockholders’ investment.

Return on common equity = (ROA)

Net income . Total assets

= $ 113.5 $ 896 12.7 %

MARKET VALUE RATIOS:
Price/ earnings ratio:
The price/earnings (P/E) ratio shows how much investors are willing to pay per dollar of reported profits.

Price/ earnings ratio = Price per share. Earnings per share

= $ 23.00 $ 2.27 10.1 times

Book value per share:

Book value per share = Total stockholder’s equity Preferred stock Common share out standing

= $ 896 $ 50 $ 17.92

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