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Compute the following ratios using the Bosch Corporation Income Statement and Balance Sheet in Excel (preferred) or Word, and submit the completed activity. This activity is worth 100 points, with each ratio worth 20 points.

1) Return on Assets
2) Receivables Turnover
3) Current Ratio
4) Profit Margin
5) Times Interest Earned



Answer :

GinnyAnswer
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.

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