Common Financial Ratios

Common Financial Ratios

Liquidity:

Acid Test Ratio = (Cash + Market Sec + Receivables) / Current Liabilities

Current ratio = Current Assets / Current Liabilities

Asset Management:

Day's Receivable = 365/ (Sales / Ending Receivables)

Day's Inventory = 365/ (Cost of Sales / Ending Inventory)

Day's Payable = 365 / (Purchases / Ending Accounts Payable)

365 / (Cost of Sales + End Inventory-Beg. Inventory) / Ending

Accounts Payable

Asset Turnover = Sales / Total Assets

Financial Leverage:

Long-term Debt to Total

Assets

= (Current LT Debt + LT Debt) / Total Assets

Long-term Debt to

Stockholders' Equity

= (Current LT Debt + LT Debt) / Stockholders' Equity

Interest Coverage Ratio = (Income Before Taxes + Interest Expense) / Interest Expense

Another major obstacle was the voting restriction in Mannesmann's articles of association. By

this statute, no shareholder was entitled to vote in excess of 5% of the outstanding capital stock of

Mannesmann. This meant that regardless of the number of shares acquired by Vodafone AirTouch,

its vote could not exceed 5%. However, this restriction was to be rescinded on June 1, 2000 pursuant

to the new German Law Regarding Control and Transparency in Business Enterprises. Even if

Vodafone AirTouch acquired 75% of the firm, it might have to wait till June 2000 to replace the

supervisory board and take control of Mannesmann's management.

There was also concern regarding the response to the hostile takeover in Germany and the

ensuing debate in Europe. Vodafone AirTouch's bid for Mannesmann at €138 billion was one of the

few foreign hostile bids in Germany and the largest one. The public response in Germany had been

quite negative. Chancellor Schroeder stated that, "Hostile takeovers destroy corporate culture," while

on the other side, Prime Minister Tony Blair said, "We