P14-5A.

Selected financial data for Black & Decker and Snap-on Tools for 2003 are presented here
(in millions).

Black & Decker Snap-On Tools

Income Statement Data for Year
Net Sales 4,482.70 2,233.20
Cost of goods sold 2,887.10 1,268.50
Selling and administrative expenses 1,126.00 814.60
Interest expense 35.20 24.40
Other income (expense) 34.20 9.00
Income tax expense 107.20 38.00
Net income (before irregular items) 293.00 78.70

Balance Sheet (End of Year)

Current assets 2,203.00 1,131.70
Property, plant, and equipment (net) 660.20 328.60
Other assets 1,359.30 678.20
Total assets 4,222.50 2,138.50
Current liabilities 1,312.10 567.20
Long-term debt 2,063.90 560.40
Total stockholders' equity 846.50 1,010.90
Total liabilities and stockholders' equity 4,222.50 2,138.50

Beginning-of-Year Balances
Total assets 4,130.50 1,994.10
Total stockholders' equity 599.60 830.40
Current liabilities 1,453.40 552.40
Total liabilities 3,530.90 1,163.70

Other Data
Average receivables (net) 762.10 551.50
Average inventory 717.80 360.50
Net cash provided by operating activities 570.60 177.00

Instructions (Round all computations to 2 decimal places.)

a) For each company, compute the following ratios.
(1) Current ratio.
(2) Receivables turnover.
(3) Average collection period
(4) Inventory turnover.
(5) Days in inventory.
(6) Profit margin.
(7) Asset turnover.
(8) Return on assets (Net income)/(Average total assets)
(9) Return on common stockholders' equity
(10) Debt to total assets.
 (11) Times interest earned.
(12) Current cash debt coverage. (Cash provided by operating activities)/(Average Current Liabilities)
(13) Cash debt coverage. (Cash provided by operating activities)/Average Total Liabilities)
(b) Compare the liquidity, solvency, and profitability of the two companies.
 Black & Decker Snap-On Tools
(1) Current ratio. 1.68 2.00
(2) Receivables turnover. 5.88 4.05
(3) Average collection period 62.05 90.14
(4) Inventory turnover. 4.02 3.52
(5) Days in inventory. 90.75 103.73
(6) Profit margin. 0.07 0.04 based on Net Income
0.36 0.43 based on Gross Margin
(7) Asset turnover. 1.07 1.08
(8) Return on assets (Net income)/(Aver 0.07 0.04 based on given formula
0.10 0.07 based on formula sa book
(9) Return on common stockholders' eq 0.41 0.09
(10) Debt to total assets. 0.80 0.53
(11) Times interest earned. 12.37 5.78
(12) Current cash debt coverage. (Cash p 0.41 0.32
(13) Cash debt coverage. (Cash provided 0.17 0.15
Liquidity

Profitability

Profitability
Profitability

Profitability
Solvency
Solvency
(1) Current ratio.
(2) Receivables turnover.
(3) Average collection period
(4) Inventory turnover.
(5) Days in inventory.
(6) Profit margin.

(7) Asset turnover.

(8) Return on assets (Net income)/(Average total assets)

(9) Return on common stockholders' equity

(10) Debt to total assets.
(11) Times interest earned.
(12) Current cash debt coverage. (Cash provided by operating activities)/(Average Current Liabilities
(13) Cash debt coverage. (Cash provided by operating activities)/Average Total Liabilities)
Black & Decker Snap-On Tools
1.68 2.00 Liquidity
5.88 4.05
62.05 90.14
4.02 3.52
90.75 103.73
0.07 0.04 based on Net Income Profitability
0.36 0.43 based on Gross Margin
1.07 1.08 Profitability
0.07 0.04 based on given formula Profitability
0.10 0.07 based on formula sa book
0.41 0.09 Profitability
0.80 0.53 Solvency
12.37 5.78 Solvency
0.41 0.32
0.17 0.15