Q1. Discuss the financial goal of a business. Ensure to provide an example of the inherent

ethical challenges associated with the financial goal and or the financial management process.

Using the financial statements provided answer questions 2 through 4

CLANCY'S DOG BISCUIT CORPORATION

Balance sheet as of December 31, 2021, and 2020 (in millions of dollars)

Assets: 2021,2020

Current assets

Cash and marketable securities $5, $5

Account receivable $20, $19.

Inventory $36, $29

Total: $61, $53

Fixed assets:

Gross plant and equipment $106, $88

Less: accumulated depreciation $15, $11

$91, $77

Net plant and equipment

Other long-term assets $15, $15

Total. $106, $92

Total assets $167, $142

Liabilities and Equity 2021,2020

Current liabilities:

Accrued wages and taxes $10, $6.

Account payable $16, $15.

Notes payable $14, $13.

Total $40, $34

Long-term debt: 57, $53

Stockholder equity

Preferred stock (2 million shares). $2, $2

Common stock and paid in surplus (5 million shares) $11,$11

Retained earnings $57, $45.

Total $70, $58

Total liabilities and equity. $167, $145

CLANCY'S DOG BISCUIT CORPORATION

Income statement for the year ending December 31. 2021/2020

(in millions of dollars)

2021,2020

Net sales: $76,$80

Less cost of goods sold $38,$35

Gross profits $38,$45

Less: other operating expenses $6,$5

Earning before taxes and depreciation and amortization (EBITDA) $32,$40

Less depreciation. $4,$4

Earning before intrest and taxes (EBIT). $28,$36

Less interest $5,$5

Earning before taxes (EBT). $23,$31

Less taxes. $5,$7

Net income $18,$24

Less preferred stock dividends $1,$1

Net income available to common stockholder. $17,$23

Less common stock dividents. $5,$5

Addition to retained earnings $12,$12

Per (common) share data:

Earning per share (EPS). $3.00,$4.20

Dividents per share (DPS). $1.00,$1.00

Book value per share (BVPS). $13.60,$11.20

Market value (price) per share (MVPS). $14.25,$14.60

Clancy's Dog Biscuit Corporation

Industry Benchmarks

Current Ratio 2.0 times

Quick Ratio 1.2 times

Cash Ratio .25 times

Inventory Turnover (sales) 2.50 times

Days sales in inventory (sales) 146.00 days

Average collection period 91.00 days

Average payment period 100 days

Fixed asset turnover 1.25 times

Sales to working capital 4.00 times

Total assets turnover .50 times

Capital Intensity 2.0 times

Debt Ratio 50%

Debt-to-Equity 1.0 times

Equity multiplier (common equity) 2.0 times

Times interest earned 7.5 times.

Cash coverage 8.0 times

Profit Margin 18.75%

Gross profit margin 49.16%

Operating profit margin 42.02%

Basic earnings power 19.90%

ROA 9.38%

ROE 18.75%

Dividend payout 35.00%

Market-to-book 1.3 times

PE ratio 4.10 times

2. Calculate the liquidity ratios (at least two). Calculate the inventory turnover ratio,

capital intensity, and the total asset turnover ratios. Calculate the debt ratio and debt-to-equity.

ratio. Discuss (Show) how you calculated these values.

3. Calculate the Profit Margin, Return on Assets, and the Return on Equity. Discuss how.

you calculated these values.

4. Using the information from questions 2, 3, and the industry benchmarks, identify and

discuss areas of strengths and weakness (where applicable) revealed in Clancy's financial.

statements.

5. In general, discuss your understanding regarding the Dupont Analysis, and how it is

useful to the organization to understand its overall profitability.