Let's compute the given financial ratios step-by-step using hypothetical values derived from Bosch Corporation's Income Statement and Balance Sheet.
1. Return on Assets (ROA):
- Formula: ROA = Net Income / Total Assets
- Net Income: Suppose the net income is \[tex]$100.
- Total Assets: Suppose the total assets are \$[/tex]500.
- Calculation: ROA = 100 / 500 = 0.2 or 20%
2. Receivables Turnover:
- Formula: Receivables Turnover = Net Credit Sales / Average Receivables
- Net Credit Sales: Suppose the net credit sales are \[tex]$200.
- Average Receivables: Suppose the average receivables are \$[/tex]50.
- Calculation: Receivables Turnover = 200 / 50 = 4.0
3. Current Ratio:
- Formula: Current Ratio = Current Assets / Current Liabilities
- Current Assets: Suppose the current assets are \[tex]$300.
- Current Liabilities: Suppose the current liabilities are \$[/tex]150.
- Calculation: Current Ratio = 300 / 150 = 2.0
4. Profit Margin:
- Formula: Profit Margin = Net Income / Total Revenue
- Net Income: Suppose the net income is \[tex]$100 (same as used in ROA).
- Total Revenue: Suppose the total revenue is \$[/tex]1000.
- Calculation: Profit Margin = 100 / 1000 = 0.1 or 10%
5. Times Interest Earned (TIE):
- Formula: TIE = Income Before Interest and Taxes (EBIT) / Interest Expense
- EBIT: Suppose the income before interest and taxes is \[tex]$150.
- Interest Expense: Suppose the interest expense is \$[/tex]25.
- Calculation: TIE = 150 / 25 = 6.0
To summarize the computed ratios:
1. Return on Assets (ROA): 0.2 or 20%
2. Receivables Turnover: 4.0
3. Current Ratio: 2.0
4. Profit Margin: 0.1 or 10%
5. Times Interest Earned (TIE): 6.0
Each ratio has been calculated based on the provided figures, which are typical placeholders used for illustrative purposes. These ratios are crucial for analyzing Bosch Corporation's financial health and efficiency.
