Question

Hurstwood Wineries Ltd. (Hurstwood) produces and markets wines from its vineyards in Ontario and B.C. You have been provided with the following income statements and balance sheets for Hurstwood:







Required:
a. Compute the following ratios and amounts for Hurstwood for 2017 and 2016:
i. Gross margin percentage
ii. Profit margin percentage
iii. Earnings per share
iv. Working capital
v. Current ratio
vi. Quick ratio
vii. Debt-to-equity ratio
viii. Interest coverage ratio
ix. Dividend payout ratio
b. Compute the following ratios and amounts for Hurstwood for 2017:
i. Asset turnover
ii. Return on equity
iii. Return on assets
iv. Inventory turnover ratio
v. Average number of days inventory on hand
vi. Accounts receivable turnover ratio
vii. Average collection period of accounts receivable
viii. Accounts payable turnover ratio
ix. Average payment period for accounts payable
x. Cash lag
c. How do the unusual items reported on the 2017 and 2016 income statements affect your ability to predict Hurstwood’s future performance?
d. Comment on Hurstwood’s liquidity, based on amounts you calculated in (a) and
(b). Be sure to consider the nature of Hurstwood’s business in yourresponse.


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  • CreatedFebruary 26, 2015
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