Instruction Please follow the instruction from these questio

Instruction:

-Please follow the instruction from these questions to analysis the level of risk for company and interpret your analysis result.

-Please answer all questions completely because I can\'t award full credit if directions are not followed completely.

Question 1

Please use images of Sprint\'s balance sheet, income statement, and cash flow to apply the below ratios to analyze this company financial position and provide clear interpretation on each ratio.  

a. Current Ratio
b. Quick Ratio
c. Days Accounts Receivable
d. Day Inventory
e. Days Accounts Payable
f. Liabilities to Asset Ratio
g. Liabilities to Shareholders’ Equity Ratio
h. Long Term Debt Ratio to Long-Term Capital Ratio
i. Operating Cash Flow to Total Liabilities Ratio
j. Interest Coverage Ratio

Question 2:

Please use the below images of Sprint\'s balance sheet, income statement and cash flow to analyze this company’s possibility to file Bankruptcy by using the Z-score.

*** formula and detail information can be found from this chapter 5

***Please provide interpretation – example for this interpretation also can be found on this chapter.

INCOME STATEMENT BALANCE SHEET CASH FLOWW Annual Download View Previous Years Quarter Fiscal year is Apr - Mar. Sprint Revenues or Net Sales Cost Of Goods Sold (COGS) 2017 2016 2015 2014 2013 33.35B 32.18B 34.53B 25.77B 35.35B 4.94B 15.23B 18.97B 14.44B 20.84B Sprint Gross Profit Research & Development Expense Selling General & Admin Expense Income Before Depreciation Depletion Amortization Depreciation Depletion Amortization 18.41B 16.95B 15.56B 11.33B 14.5B 8.5B 9.55B 9.98B 7.63B 9.78B 9.91B 7.4B 5.59B 3.7B 4.72B 8.15B 7.09B 7.48B 4.23B 6.54B Non Operating Income 40M 18M 27M 68M 924M Interest Expense 2.5B 2.18B 2.05B 1.43B 1.43B Sprint Pretax Income 1.85B 3.92B 1.9B -4.17B Provision for Income Taxes 435M 141 M 574M 100MM 154M Minority Interest Investment Gains Losses Other Income Income Before Extraordinaries & Disc Operations 1.21B-2B .35B -2B -4.33B

Solution

solution:- current ratio= current assets/ current liabilities

14.12B/12.46B

=1.133

since the current ratio is more than 1 , it shows the company has $1.133 in its hand to meet the current obligations of $1.

2. quick ratio= liquid assets/ current liabilities

current assets- inventory/ current liabilities

14.12-1.06/12.46

13.06/12.46

=1.048

since the liquid ratio is more than 1 it means the company has $1.048 liquid assets in hand to meet the current obligations.

3. days accounts receivables= 365/ debtor turnover ratio

* debtor turnover ratio= net credit sales/ average accounts receivables

33.35 B/4.14+1.4

33.35/5.54=6.019

debtor turnover ratio= 365/6.019=60.64 days

it means after 60.64 days amount is collected from the debtors .

4. liabilities to assets ratio= liabilities / assets

=66.52B/ 85.12B

=0.781 times

it means total liabilities are covered on assets by 0.781 times i.e assets are in healthy amount to cover the risk of the outsiders.

5. liabilities to shareholders equity ratio=total liabilities / equity shareholders

=66.52B/18.81B=3.536 times

it means owners funds deployed in the business is less than the outsiders by 3.536 times i.e company has significant amount of debt proportion in the capital structure .

6.lomg term debt ratio/ long term capital

35.88B/18.81B=1.907

it means company has 1.907 times more funds of outsiders in the business than the owners funds , company is taking the benefits of favourable financial leverage and trading on equity.