Question 3.5: Take a look at the most recent numbers reported for Cost of ...
Take a look at the most recent numbers reported for Cost of Sales/Inventory and EBIT/ Interest in Table 3.13.
| TABLE 3.13 | Selected Ratios | ||||||||
| Manufacturing—Wineries (NAICS 312130) | |||||||||
| COMPARATIVE HISTORICAL DATA | CURRENT DATA SORTED BY SALES | ||||||||
| Type of Statement | |||||||||
| 38 | 33 | 29 | Unqualified | 1 | 2 | 4 | 22 | ||
| 40 | 53 | 41 | Reviewed | 2 | 15 | 15 | 9 | ||
| 17 | 15 | 12 | Compiled | 1 | 2 | 3 | 3 | 2 | 1 |
| 24 | 25 | 26 | Tax Returns | 11 | 6 | 4 | 4 | 1 | |
| 100 | 150 | 150 | Other | 24 | 35 | 20 | 18 | 26 | 27 |
| 4/1/13– 3/31/14 ALL 219 | 4/1/14– 3/31/15 ALL 276 | 4/1/15– 3/31/16 ALL 258 | NUMBER OF STATEMENTS | 31 (4/1–9/30/15) | 227 (10/1/15–3/31/16) | ||||
| 0–1MM 37 | 1–3MM 45 | 3–5MM 27 | 5–10MM 42 | 10–25MM 48 | 25MM & OVER 59 | ||||
| Ratios | |||||||||
| 4.0 | 4.5 | 4.0 | Current | 4.1 | 5.8 | 5.9 | 3.8 | 2.4 | 3.4 |
| 2.1 | 2.0 | 2.1 | 2.7 | 2.3 | 3.3 | 2.3 | 1.5 | 1.9 | |
| 1.4 | 1.4 | 1.4 | 1.4 | 1.5 | 1.8 | 1.8 | 1.2 | 1.3 | |
| .9 | .9 | .9 | Quick | 1.2 | 1.1 | 1.9 | 1.2 | .6 | .7 |
| .3 | .3 | .3 | .3 | .3 | .5 | .4 | .3 | .4 | |
| .2 | .2 | .2 | .1 | .2 | .2 | .2 | .1 | .2 | |
| 16 23.0 | 15 24.8 | 15 23.7 | Sales/ Receivables |
0 UND | 7 49.3 | 11 32.8 | 16 22.4 | 21 17.2 | 28 13.1 |
| 30 12.2 | 34 10.6 | 31 11.8 | 10 35.6 | 28 12.9 | 20 18.3 | 29 12.6 | 37 9.8 | 41 8.9 | |
| 51 7.1 | 52 7.0 | 52 7.0 | 46 7.9 | 50 7.3 | 39 9.4 | 57 6.4 | 56 6.5 | 59 6.2 | |
| 261 1.4 | 332 1.1 | 304 1.2 | Cost of Sales/ Inventory |
192 1.9 | 304 1.2 | 261 1.4 | 304 1.2 | 365 1.0 | 261 1.4 |
| 456 .8 | 521 .7 | 521 .7 | 608 .6 | 608 .6 | 608 .6 | 608 .6 | 521 .7 | 365 1.0 | |
| 730 .5 | 912 .4 | 730 .5 | 912 .4 | 912 .4 | 730 .5 | 730 .5 | 730 .5 | 608 .6 | |
| 25 14.4 | 26 14.0 | 21 17.3 | Cost of Sales/ Payables |
0 UND | 10 36.2 | 21 17.2 | 23 16.0 | 36 10.1 | 23 16.1 |
| 55 6.6 | 59 6.2 | 51 7.2 | 48 7.6 | 53 6.9 | 35 10.3 | 47 7.8 | 69 5.3 | 51 7.2 | |
| 101 3.6 | 122 3.0 | 107 3.4 | 166 2.2 | 146 2.5 | 70 5.2 | 122 3.0 | 122 3.0 | 76 4.8 | |
| 1.4 | 1.3 | 1.3 | Sales/Working Capital |
1.2 | 1.2 | 1.1 | 1.3 | 2.0 | 1.9 |
| 2.7 | 2.4 | 2.6 | 2.0 | 2.8 | 2.3 | 2.1 | 3.7 | 2.9 | |
| 6.6 | 5.1 | 2.5 | 7.8 | 5.8 | 4.0 | 2.8 | 6.7 | 6.0 | |
| 9.7 | 11.4 | 14.3 | EBIT/Interest | 4.5 | 7.9 | 31.5 | 12.3 | 13.0 | 19.9 |
| (200) 3.9 | (252) 4.7 | (235) 3.7 | (31) 1.0 | (36) 3.6 | (25) 9.0 | (40) 2.3 | (46) 4.1 | (57) 5.7 | |
| 1.4 | 1.7 | 1.3 | -2.1 | 1.2 | 2.1 | 1.1 | 1.2 | 2.8 | |
| 8.0 | 9.1 | 9.5 | Net Profit + Depr., Dep,. Amort./Cur. Mat. L/T/D |
6.9 | 17.3 | ||||
| (42) 4.8 | (55) 5.0 | (45) 5.9 | (10) 3.5 | (24) 7.7 | |||||
| 1.9 | 2.6 | 2.6 | 1.8 | 4.3 | |||||
| .3 | .2 | .2 | Fixed/Worth | .2 | .2 | .1 | .4 | .2 | .3 |
| .8 | .7 | .7 | .6 | .7 | .4 | 1.0 | .8 | .8 | |
| 1.6 | 1.4 | 1.5 | 4.5 | 1.5 | 1.1 | 1.5 | 1.9 | 1.3 | |
| .6 | .6 | .6 | Debt/Worth | .5 | .5 | .4 | .6 | 1.2 | .8 |
| 1.5 | 1.4 | 1.4 | 2.6 | 1.0 | 1.2 | 1.4 | 2.1 | 1.1 | |
| 4.1 | 3.0 | 3.9 | 24.2 | 2.7 | 4.3 | 2.8 | 4.3 | 3.2 | |
| 32.8 | 33.9 | 32.7 | % Profit Before Taxes/Tangible Net Worth |
34.2 | 25.0 | 47.0 | 20.0 | 42.2 | 27.9 |
| (194) 14.8 | (253) 15.6 | (230) 13.6 | (29) 5.5 | (41) 11.8 | (25) 20.5 | (38) 7.4 | (43) 19.6 | (54) 18.3 | |
| 2.7 | 3.3 | 2.7 | -8.9 | 4.6 | 3.3 | 0.4 | 3.7 | 10.2 | |
What are the overall median values? What are these ratios?
If you look back at our discussion, you will see that these are the inventory turnover and the times interest earned, or TIE, ratios. The median value for inventory turnover for the entire group is .7 times. So, the days’ sales in inventory would be 365/.7 = 521 days, which is the boldfaced number reported. While this is long compared to other industries, this doesn’t seem like very long for fine wines. The median for the TIE is 3.7 times. The number in parentheses indicates that the calculation is meaningful for, and therefore based on, only 235 of the 258 companies. In this case, the reason is that only 235 companies paid any significant amount of interest.