652 Chapter 14 Financial Statement Analysis
DreamWorks Motion Picture
Equation Pixar Animation Industry
Rate earned on stockholders’
equity13.1% 81.8% 13.6%
Rate earned on total assets 12.4% 35.4% 4.7%Leverage ratio 1.05 2.31 2.90Profit margin 51.8% 30.9% 9.8%Asset turnover 0.24 1.15 0.5Accounts receivable turnover 1.91 4.16 2.94Number of days’ sales in
receivables191.3 87.9 124.1
Inventory turnover 0.24 1.20 4.9Number of days’ sales in
inventory1,510 306 75.1
Fixed asset turnover 2.27 12.27 10.8Current ratio 17.10 4.76 1.1Quick ratio 17.06 2.95 0.65Ratio of fixed assets to
long-term liabilitiesNA 0.41 0.35
Ratio of liabilties to
stockholders’ equity0.04 0.45 1.9
Number of times interest
charges earnedNA 29.2 0.8
Earnings per share $2.50 $4.09 *Price-earnings ratio 36.02 9.15 NegativeDividend yield NA NA 0.3%NA: Not applicable
* Earnings per share is not often compared to industry averages, since it is more meaningfully compared to stock price using the price-
earnings ratio.Exhibit 8
Summary of Analytical MeasuresDividends per share of common stock
Market price per share of common stockMarket price per share of common stock
Earnings per share of common stockNet income Preferred dividends
Shares of common stock outstandingIncome before income tax Interest expense
Interest expenseTotal liabilities
Total stockholders’ equityFixed assets (net)
Long-term liabilitiesQuick assets
Current liabilitiesCurrent assets
Current liabilitiesNet sales
Average fixed assets, netAverage inventory
Average daily cost of goods soldCost of goods sold
Average inventoryAverage accounts receivable
Average daily net salesNet sales
Average accounts receivableNet sales
Average total assetsNet income
Net salesAverage total assets
Average stockholders’ equityNet income
Average total assetsNet income
Average total stockholders’ equity