Related questions with answers

Selected balance sheet and income statement information from Siemens, AG, for 2015 through 2017 follows(Euro in millions).

	Total Current Assets	Total Current Liabilities	Cash Flow from Operations	Pretax Income	Interest Expense	Total Liabilities	Stockholders' Equity
2015	51,442	39,562	6,612	7,218	818	85,293	34,474
2016	55,329	42,916	7,611	7,404	989	90,901	34,211
2017	58,429	43,394	7,176	8,306	1,051	89,277	43,089

Compute the current ratio for each year and discuss any trend in liquidity. Also compute the operating cash flow to current liabilities (OCFCL) ratio for each year. (In 2014, current liabilities totaled 36,598 million euros.) Do you believe the company is sufficiently liquid? Explain. What additional information about the accounting numbers comprising this ratio might be useful in helping you assess liquidity? Explain.

Gross profit margin [(Sales revenue - Cost of goods sold)/Sales revenue] is an important determinant of profit margin. Identify two factors that can cause gross profit margin to decline. ls a reduction in the gross profit margin always bad news? Explain.

A company's current ratio is 2 and its quick ratio is 1. What can be said about the sum of the company's cash + short-term securities + accounts receivable? a. The sum exceeds the current liabilities. b. The sum is equal to the sum of the current liabilities. c. The sum is equal to 1/2 of the total current liabilities. d. None of the above is correct.

Question

Selected balance sheet and income statement information from Siemens, AG, for 2015 through 2017 follows(Euro in millions).

Total Current Assets Total Current Liabilities Cash Flow from Operations Pretax Income Interest Expense Total Liabilities Stockholders' Equity

2015 51,442 39,562 6,612 7,218 818 85,293 34,474

2016 55,329 42,916 7,611 7,404 989 90,901 34,211

2017 58,429 43,394 7,176 8,306 1,051 89,277 43,089

Compute times interest earned and the debt-to-equity ratio for each year and discuss any trends for each.

Solution

Verified

Answered 1 year ago

Step 1

1 of 15

In this problem, we are asked to calculate the times interest earned and the debt-to-equity ratio for each year, as well as to discuss any trends in each ratio.