Essay About Sharedividend Payout Ratio2007 And Net Profit Margin2007

Banking Case
Banking Case
Chapter 8Calculate the following, for both 2007 and 2008 Return on assets2007:         427456 / 2017074 = 21.19%2008:        197692 / 1988433 = 9.94%Return on equity2007:        427456 / 1781957 = 23.99%2008:        197692 / 1781454 = 11.09%Net profit margin2007:        427456 / 972625 =        43.95%2008:        197629 / 5122825 = 38.6%Earnings per share2007:        427456 / 318908 = 1.34 per share2008:        197629 / 316150 = 0.63 per shareDividend payout ratio2007:         0.13 / 1.34 = 9.7%2008:        0.17 / 0.63 = 27%Net working capital2007:        1727848 – 202224 = 15256242008:        1727581 – 168997 = 1558584Current ratio2007:        1727848 / 202224 = 8.54 times2008:        1727581 / 168997 = 10.22 timesAcid test ratio2007:        1638838 / 202224 = 8.10 times2008:        1633407 / 168997 = 9.67 timesAverage collection period2007:        89836 / (972625 / 360) = 33.25 days2008:        81447 / (512282 / 360) = 57.23 daysAverage payment period2007:        10615 / (231122 / 360) = 17 days2008:        5098 / (144719 / 360) = 13 daysInventory turnover ratio2007:        231122 / 25592 = 9.03 times2008:        144719 / 28942 = 5 timesAge of inventory2007:        360/ 9.03 = 40 days2008:        360 / 5 = 72 daysAsset turnover ratio2007:        972625 / 2017074 = 48%2008:        512282 / 1988433 = 26%Debt ratio2007:        235117 / 2017074 = 11.66%2008:        206979 / 1988433 = 10.4%Long-term debt as a percentage of total capital2007:        N/A2008:        N/A                Times interest earned2007:        N/A2008:        N/AWhat conclusions can you draw from the comparison of these ratios over the 2 years? According to Chipco’s financial statement, ROE, ROA and earning per share for the year ended 2008 dropped significantly compared to 2007 as there was decrease in sales while fixed costs remained stable. Apart from drop in net profit margin, gross profit margin also decreased around 6.6% which might be the result of rising in cost of goods sold or lower in sale price. Despite decrease in profitability, dividend payout ratio increased around 178% in 2008 which is very sharp rise.