- Du Pont
- Calculate the following ratios for DuPont for 1997 and 1996:
- current ratio
1997: current ratio = $11,874/$14,070 = 0.8439 times

1996: current ratio = $11,103/$10,987 = 1.0106 times

- inventory turnover
1997: inventory turnover = $26,377/$4,070 = 6.4808 times

1996: inventory turnover = $25,144/$3,706 = 6.7847 times

- total asset turnover
1997: total asset turnover = $46,653/$42,942 = 1.0864 times

1996: total asset turnover = $45,150/$37,870 = 1.1922 times

- operating profit margin
Note: operating profit is not provided directly on the income statement, but must be calculated.

1997: operating profit margin = $13,607/$46,653 = 0.2917 or 29.17%

1996: operating profit margin = $13,093/$45,150 = 0.2900 or 29%

- net profit margin
1997: net profit margin = $2,405/$46,653 = 0.0516 or 5.16%

1996: net profit margin = $3,636/$45,150 = 0.0805 or 8.05%

- debt to equity
1997: debt to equity = $31,002 / $11,270 = 2.7508

1996: debt to equity = $26,657 / $10,593 = 2.5165

- current ratio
- Evaluate the change in the return on assets from 1996 to 1997 for DuPont using the DuPont system.
1997: return on assets = $2,405 / $42,942 = 0.0560 or 5.60%

1996: return on assets = $3,636 / $37,870 = 0.0960 or 9.60%

The return on assets declined from 1996 to 1997. This decline is attributed to both a decline in profitability (as evidenced by the decrease in the net profit margin from 8.05% to 5.16%) and the decline in efficiency (as evidenced by the decrease in the total asset turnover from 1.1922 to 1.0864 times)

- Calculate the following ratios for DuPont for 1997 and 1996:
- Intel, 1998
- Calculate the following ratios for Intel for 1998:
- Fixed asset turnover
fixed asset turnover = $26,273 / $11,609 = 2.2632

- Operating profit margin
operating profit margin = $8,379 / $26,273 = 31.892%

- Basic earning power
basic earning power = $8,379 / $31,471 = 26.625%

- Fixed asset turnover
- Has Intel's interest coverage ratio improved from 1996? Explain.
interest coverage, 1996 = $7,553 / $25 = 302.12 times

interest coverage, 1997 = $9,887 / $27 = 366.19 times

interest coverage, 1998 = $8,379 / $34 = 246.44 times

The actual coverage ratio decreased slightly from 1996 to 1998, but this ratio is not very meaningful in the context of evaluating Intel because Intel uses so little debt in its capital structure (e.g., the ratio of debt to equity is less than 7% in 1998).

- Calculate the following ratios for Intel for 1998: