Question

Data for Obras Corporation in 2014 and 2013 follow. These data should be used in conjunction with the data in P1.


In P1, Obras Corporation’s condensed comparative income statements and comparative balance sheets for 2014 and 2013 follow.


Selected balances at the end of 2012 were accounts receivable (net), $206,800; inventory, $547,200; total assets, $1,465,600; accounts payable, $386,600; and stockholders’ equity, $641,200. All of Obras’s notes payable were current liabilities; all its bonds payable were long-term liabilities.
Required
Perform a comprehensive ratio analysis following the steps outlined below. (Round to one decimal place.)
1. Prepare a operating asset management analysis by calculating for each year the
(a) Current ratio,
(b) Quick ratio,
(c) Receivables turnover,
(d) Days’ sales uncollected,
(e) Inventory turnover,
(f) Days’ inventory on hand,
(g) Payables turnover,
(h) Days’ payable,
(i) Financing period.
2. Prepare a profitability and total asset management analysis by calculating for each year the (a) profit margin, (b) asset turnover, and (c) return on assets.
3. Prepare a financial risk analysis by calculating for each year the (a) debt to equity ratio, (b) return on equity, and (c) interest coverage ratio.
4. Prepare a liquidity analysis by calculating for each year the
(a) Cash flow yield,
(b) Cash flows to sales,
(c) Cash flows to assets,
(d) Free cash flow.
5. Prepare a market strength analysis by calculating for each year the
(a) Price/earnings (P/E) ratio
(b) Dividend yield.
6. After making the calculations, indicate whether each ratio improved or deteriorated from 2013 to 2014 (use F for favorable and U for unfavorable and consider changes of 0.1 or less to beneutral).


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  • CreatedMarch 26, 2014
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