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Source: Based on data from Hewlett-Packard Co.

Annual Reports

Ratio

Description

The company
Hewlett-Packard Co.'s inventory
An activity ratio calculated as
turnover improved from 2011 to
Inventory turnover
cost of goods sold divided by
2012 but then slightly
inventory.
deteriorated from 2012 to 2013.
Hewlett-Packard Co.'s
receivables turnover improved
An activity ratio equal to revenue
Receivables turnover
from 2011 to 2012 but then
divided by receivables.
slightly deteriorated from 2012 to
2013 not reaching 2011 level.
Hewlett-Packard Co.'s payables
An activity ratio calculated as
turnover increased from 2011 to
Payables turnover
cost of goods sold divided by
2012 but then declined
payables.
significantly from 2012 to 2013.
Hewlett-Packard Co.'s working
An activity ratio calculated as
capital turnover deteriorated from
Working capital turnover revenue divided by working
2011 to 2012 and from 2012 to
capital.
2013.
Hewlett-Packard Co.'s average
An activity ratio equal to the
inventory processing period
Average inventory
number of days in the period
improved from 2011 to 2012 but
processing period
divided by inventory turnover
then slightly deteriorated from
over the period.
2012 to 2013.
An activity ratio equal to the
Average receivable
number of days in the period
collection period
divided by receivables turnoverd.
Hewlett-Packard Co.'s operating
Equal to average inventory
cycle improved from 2011 to
Operating cycle
processing period plus average 2012 but then slightly
receivables collection period.
deteriorated from 2012 to 2013
not reaching 2011 level.
An estimate of the average
Hewlett-Packard Co.'s average
number of days it takes a
payables payment period
Average payables payment company to pay its suppliers;
declined from 2011 to 2012 but
period
equal to the number of days in
then increased from 2012 to 2013
the period divided by payables
exceeding 2011 level.
turnover ratio for the period.
Cash conversion cycle
A financial metric that measures Hewlett-Packard Co.'s cash
the length of time required for a conversion cycle improved from
company to convert cash
2011 to 2012 and from 2012 to
invested in its operations to cash 2013.

received as a result of its


operations; equal to average
inventory processing period plus
average receivables collection
period minus average payables
payment period.
Inventory Turnover:

2013 Calculations
1

Inventory turnover = Cost of sales Inventory


= 86,380 6,046 = 14.29
Ratio
Inventory turnover

Description
An activity ratio calculated as
cost of goods sold divided by
inventory.

The company
Hewlett-Packard Co.'s inventory
turnover improved from 2011 to
2012 but then slightly
deteriorated from 2012 to 2013.

Receivables Turnover: 2013 Calculations


1

Receivables turnover = Net revenue Accounts receivable


= 112,298 15,876 = 7.07
Ratio
Receivables turnover

Description

The company
Hewlett-Packard Co.'s
receivables turnover improved
An activity ratio equal to revenue
from 2011 to 2012 but then
divided by receivables.
slightly deteriorated from 2012 to
2013 not reaching 2011 level.

Payable Turnover
2013 Calculations
1

Payables turnover = Cost of sales Accounts payable


= 86,380 14,019 = 6.16
Ratio
Payables turnover

Description
An activity ratio calculated as
cost of goods sold divided by
payables.

The company
Hewlett-Packard Co.'s payables
turnover increased from 2011 to
2012 but then declined
significantly from 2012 to 2013.

Working Capital Turnover:

2013 Calculations
1

Working capital turnover = Net revenue Working capital


= 112,298 4,843 = 23.19
Ratio

Description

An activity ratio calculated as


Working capital turnover revenue divided by working
capital.

The company
Hewlett-Packard Co.'s working
capital turnover deteriorated from
2011 to 2012 and from 2012 to
2013.

Average Inventory Turnover:

2013 Calculations
1

Average inventory processing period = 365 Inventory turnover


= 365 14.29 = 26
Ratio
Average inventory
processing period

Description
An activity ratio equal to the
number of days in the period
divided by inventory turnover
over the period.

The company
Hewlett-Packard Co.'s average
inventory processing period
improved from 2011 to 2012 but
then slightly deteriorated from
2012 to 2013

Average Collection:

2013 Calculations
1

Average receivable collection period = 365 Receivables turnover


= 365 7.07 = 52
Ratio
Average receivable
collection period

Description
An activity ratio equal to the
number of days in the period
divided by receivables turnoverd.

The company

Operating Cycle:

2013 Calculations
1

Operating cycle = Average inventory processing period + Average receivable collection period
= 26 + 52 = 78

Ratio
Operating cycle

Description
Equal to average inventory
processing period plus average
receivables collection period.

The company
Hewlett-Packard Co.'s operating
cycle improved from 2011 to
2012 but then slightly
deteriorated from 2012 to 2013
not reaching 2011 level.

Average Payables:

2013 Calculations
1

Average payables payment period = 365 Payables turnover


= 365 6.16 = 59
Ratio

Description
An estimate of the average
number of days it takes a
Average payables payment company to pay its suppliers;
period
equal to the number of days in
the period divided by payables
turnover ratio for the period.

The company
Hewlett-Packard Co.'s average
payables payment period
declined from 2011 to 2012 but
then increased from 2012 to 2013
exceeding 2011 level.

Cash Conversion Cycle:

2013 Calculations
1

Cash conversion cycle = Average inventory processing period + Average receivable collection
period Average payables payment period
= 26 + 52 59 = 19
Ratio

Cash conversion cycle

Ratio
Debt-to-equity ratio

Description
A financial metric that measures
the length of time required for a
company to convert cash
invested in its operations to cash
received as a result of its
operations; equal to average
inventory processing period plus
average receivables collection
period minus average payables
payment period.
Description
A solvency ratio calculated as
total debt divided by total

The company

Hewlett-Packard Co.'s cash


conversion cycle improved from
2011 to 2012 and from 2012 to
2013.

The company
Hewlett-Packard Co.'s debt-toequity ratio deteriorated from

shareholders' equity.

Debt-to-capital ratio

A solvency ratio calculated as


total debt divided by total debt
plus shareholders' equity.

Interest coverage ratio

A solvency ratio calculated as


EBIT divided by interest
payments.

2011 to 2012 but then improved


from 2012 to 2013 not reaching
2011 level.
Hewlett-Packard Co.'s debt-tocapital ratio deteriorated from
2011 to 2012 but then improved
from 2012 to 2013 not reaching
2011 level.
Hewlett-Packard Co.'s interest
coverage ratio deteriorated from
2011 to 2012 but then improved
from 2012 to 2013 not reaching
2011 level.

Source: Based on data from Hewlett-Packard Co. Annual Reports

2013 Calculations
1

Debt to equity = Total debt Total HP stockholders' equity


= 22,587 27,269 = 0.83
Ratio
Debt-to-equity ratio

Description
A solvency ratio calculated as
total debt divided by total
shareholders' equity.

The company
Hewlett-Packard Co.'s debt-toequity ratio deteriorated from
2011 to 2012 but then improved
from 2012 to 2013 not reaching
2011 level.

Source: Based on data from Hewlett-Packard Co. Annual Reports

2013 Calculations
1

Debt to capital = Total debt Total capital


= 22,587 49,856 = 0.45
Ratio
Debt-to-capital ratio

Description
A solvency ratio calculated as
total debt divided by total debt
plus shareholders' equity.

Source: Based on data from Hewlett-Packard Co. Annual Reports

2013 Calculations

The company
Hewlett-Packard Co.'s debt-tocapital ratio deteriorated from
2011 to 2012 but then improved
from 2012 to 2013 not reaching
2011 level.

Interest coverage = EBIT Interest expense


= 7,248 738 = 9.82
Ratio
Interest coverage ratio

Description
A solvency ratio calculated as
EBIT divided by interest
payments.

The company
Hewlett-Packard Co.'s interest
coverage ratio deteriorated from
2011 to 2012 but then improved
from 2012 to 2013 not reaching
2011 level.

Source: Based on data from Hewlett-Packard Co. Annual Reports

Ratio
Current ratio

Quick ratio

Cash ratio

Description
A liquidity ratio calculated as
current assets divided by current
liabilities.
A liquidity ratio calculated as
(cash plus short-term marketable
investments plus receivables)
divided by current liabilities.
A liquidity ratio calculated as
(cash plus short-term marketable
investments) divided by current
liabilities.

The company
Hewlett-Packard Co.'s current
ratio improved from 2011 to
2012 and from 2012 to 2013.
Hewlett-Packard Co.'s quick ratio
improved from 2011 to 2012 and
from 2012 to 2013.
Hewlett-Packard Co.'s cash ratio
improved from 2011 to 2012 and
from 2012 to 2013.

Source: Based on data from Hewlett-Packard Co. Annual Reports

Ratio
Net fixed asset turnover

Total asset turnover

Equity turnover

Description

The company
Hewlett-Packard Co.'s net fixed
An activity ratio calculated as
asset turnover deteriorated from
total revenue divided by net fixed
2011 to 2012 and from 2012 to
assets.
2013.
Hewlett-Packard Co.'s total asset
An activity ratio calculated as
turnover improved from 2011 to
total revenue divided by total
2012 but then slightly
assets.
deteriorated from 2012 to 2013.
Hewlett-Packard Co.'s equity
An activity ratio calculated as
turnover improved from 2011 to
total revenue divided by
2012 but then slightly
shareholders' equity.
deteriorated from 2012 to 2013
not reaching 2011 level.