Interpreting Financial Statements: Ratio Calculations
Exabyte Corporation reported the following subtotals in its 1994 annual report, in thousands of dollars, for the years ending December 31, 1994 and January 1, 1994 (note that these dates still represent two consecutive fiscal years):
|
December 31 |
January 1 |
|
|
1994 |
1994 |
|
|
Total current liabilities |
$ 45,621 |
$ 38,318 |
|
Long term obligations |
237 |
454 |
|
Total stockholders’ equity |
196,907 |
158,535 |
|
Total liabilities and equity |
$242,765 |
$197,307 |
Required
a. Calculate Exabyte’s debt and equity composition ratios (vertical analysis).
b. Which factors indicate that Exabyte has a low risk of default on its long term debt?
c. What is Exabyte’s apparent debt management strategy?
d. Which other indicators might be used to assess Exabyte’s risk of default?
e. Can the most recent year be compared with the fiscal year ended January 1,
1994? Why would a company change its year end by a few days? What other information would be helpful in assessing these issues?