Chapter 11
Financial Statement Analysis
597
Required
a) Given the data for Ivory Inc., calculate the following ratios for 2016 (round to two
decimal places). The company’s ratios for 2015 are given for comparison.
Ratio
2015
i)
Current Ratio
3.5
ii)
Interest Coverage Ratio
5.40
iii)
Debt to Equity
25.00%
iv)
Return on Assets
12.50%
v)
Return on Equity
20.20%
vi)
Net Profit Margin
8.60%
Ratio
2016
i)
ii)
iii)
iv)
v)
vi)
b) Using 2015 as a comparison, discuss whether the company improved or deteriorated
in its ability to (i) pay current liabilities as they come due, (ii) meet its non-current debt
obligations and (iii) profitability. Be sure to make reference to specific ratios in your
answers.
