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Financial statement analysis (FIN621)......Assignment no 1 .....Due date : 23 Jan 2017 ....Marks: 10

Friends See the Assignment no 1 of Fin621 in the Attachement file ...thanks

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0.38

Right 0.38 hi ati hy debt equity ratio
Total debt=Total assets _ total equity
Total debt= 1687500_1217213=470287
Debt to equity ratio=Total debt/total equity
Debt to equity ratio =470287/1217213=0.38
Debt to equity ratio 0.38 hy
 Financial Data Mr. Ijaz Business 1-Working Net Sale 24,00,000 Net Income 1,75,000 Net Profit Margin (Net Profit/Sale) 7.291% =175000/2400000 Total Debts 32,20,000 D to E*T/E 1400000*2.3 Total Equity 14,00,000 Net Profit*100/ROE 175000*100/12.5 Total Assets 14,11,765 Sale/Asset Turnover 2400000/1.7 ROE  (Net profit/Equity) 12.5% Assets Turnover (T-Sale/Assets) 1.7 Debt to Equity Ratio (T-Debts/Equity) 2.3

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How to find Competitor's Debt and Debt to Equity Ratio?

Asset turn over ratio formula: net sales/Total asset .....its confirmed

"Formula. The asset turnover ratio is calculated by dividing net sales by average total assets. Net sales, found on the income statement, are used to calculate this ratio returns and refunds must be backed out of total sales to measure the truly measure the firm's assets' ability to generate sales.

FIN-621

Find out the missing values in the table by using the provided financial data Financial Data Mr.IJazbusiness Competitor’sBusiness
Net Sales 2,400,000 2,700,000
Net income 175,000
Net profit margin (W-1) 7.29% 5.50%
Total Debt (w-4) 608,696
Total Equity (W-3) 1,400,000
Total asset (W-2) 102941
Return on Equity 12.50% 12.20%
Asset turnover 1.7 1.6
Debt-to-equity ratio 2.3

W-1) Net Profit Margin=Net Income/Net Sales or Revenue *100
= 175,000 / 2,400,000
=7.29%
(W-2) ROA = Annual Net Income/Total Assets
1.7 = 175,000/Total Assets
175,000/1.7 = Total Assets
Total Assets = 102941.2
(W-3) Return On Equity Ratio = Net Income / Equity
12.50% =175,000 / Equity
Equity = 1,40.0000
(W-4) Debt to Equity Ratio =Total Debt /Equity
2.3 = Total debt / 1,40,000
Equity = 1,400,000 /2.3
Equity = 608,696
Based on the results of profitability and Debt-Equity ratio, should the bank sanction a loan to the business of Mr. Ijaz? Support your answer with logical comments
On the base of Debt-Equity ratio bank can not sanction a loan to the business of Mr. Ijaz because A debt to equity ratio of 1 would mean that investors and creditors have an equal stake in the business assets.
A lower debt to equity ratio usually implies a more financially stable business. Companies with a higher debt to equity ratio are considered more risky to creditors and investors than companies with a lower ratio.

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