(Ratio analysis) The financial statements and industry norms for Pamplin Inc. are shown in the popup...
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(Ratio analysis) The financial statements and industry norms for Pamplin Inc. are shown in the popup window: a. Compute the ratios in the popup window, E. for 2017 and 2018 to compare both against the industry norms. b. How liquid is the firm? c. Are its managers generating an adequate operating profit on the firm's assets? d. How is the firm financing its assets? e. Are its managers generating a good return on equity? Note: 15% of sales are cash sales, with the remaining 85% being credit sales. a. Compute the following ratios for 2017 and 2018 to compare both against the industry norms. (Round the numbers to two decimal places and select your evaluation from the drop-down menu.) 2017 2018 Evaluation Industry Norm 5.00X X x Current ratio Poor KIED Pamplin Inc. Balance Sheet at 12/31/2017 and 12/31/2018 ASSETS Cash Accounts receivable Inventory Current assets Plant and equipment Less accumulated depreciation Net plant and equipment Total assets LIABILITIES AND OWNERS' EQUITY Accounts payable Notes payable current (9.00% interest) Current liabilities Bonds (8.33% interest) Total debt Owners' equity Common stock Paid-in capital Retained earnings Total owners' equity Total liabilities and owners' equity Sales (85% credit sales) Cost of goods sold Gross profit Operating expenses Depreciation $ 2,200 Operating profits Interest expense Profit before taxes Taxes (21%) Net Income (1,001) $ 35 221 $ 295 599 703 (Click on the following icon in order to copy its contents into a spreadsheet.) Pamplin Inc. Income Statement for Years Ending 12/31/2017 and 12/31/2018 2017 $ 1.201 696 $ 505 2017 $ 201 445 555 ||$ $ 1,201 $ $ 1.199 $ 2,400 $ 201 0 $ 201 602 $803 $ 1,597 $ 2,400 256 $ 249 54 195 41 154 $ 2,603 (1,201) $ 295 599 798 $ 42 200 2018 $150 428 621 $ 1,199 $ 1,402 $ 2,601 154 153 $ 307 $ $ 602 909 $ 1,692 $ 2.601 2018 $ 1,452 853 $599 I 242 357 295 $ 233 (Click on the following icon in order to copy its contents into a spreadsheet.) 2017 Industry Norm 5.00 3.00 2.20 90.00 33% Current ratio Acid-test (quick) ratio Inventory turnover Average collection period Debt ratio Times interest earned Total asset turnover Fixed asset turnover Operating profit margin Return on common equity 7.00 0.75 1.00 20.0% 9.0% 2018 its 120 TY rest) Pamplin Inc. Balance Sheet at 12/31/2017 and 12/31/2018 ASSETS Cash Accounts receivable Inventory Current assets Plant and equipment Less accumulated depreciation Net plant and equipment Total assets LIABILITIES AND OWNERS' EQUITY Accounts payable Notes payable current (9.00% interest) Current liabilities Bonds (8.33% interest) Total debt Owners' equity Common stock Paid-in capital Retained earnings Total owners' equity Total liabilities and owners' equity $ 2,200 (1,001) 295 599 703 2017 $ 201 445 555 $ 1,201 $ 1,199 $ 2,400 $ 201 0 $ 201 602 $ 803 $ 1,597 $ 2,400 opy its (Click on the following icon in order to copy its contents into a spreadsheet.) Endin $ 2,603 (1,201) 295 599 798 2018 $ 150 428 621 $ 1,199 $ 1,402 $ 2,601 $ 154 153 $ 307 602 $ 909 $ 1,692 $ 2,601 n QUITY (Click on the following icon in order to copy its contents into a spreadsheet.) Pamplin Inc. Income Statement for Years Ending 12/31/2017 and 12/31/2018 2017 ty Sales (85% credit sales) Cost of goods sold Gross profit Operating expenses Depreciation interest) Operating profits Interest expense Profit before taxes Taxes (21%) Net income $ 35 221 $ 1,201 696 $ 505 256 $ 249 54 $ $ 195 41 154 $ 42 200 2018 $ 1,452 853 $ 599 ****** 27 242 $ 357 $ 295 $ 233 (Click on the following icon in order to copy its contents into a spreadsheet.) 2017 Industry Norm 5.00 3.00 2.20 90.00 33% 7.00 0.75 1.00 20.0% 9.0% Current ratio Acid-test (quick) ratio Inventory turnover Average collection period Debt ratio Times interest earned Total asset turnover Fixed asset turnover Operating profit margin Return on common equity 2018 (Ratio analysis) The financial statements and industry norms for Pamplin Inc. are shown in the popup window: a. Compute the ratios in the popup window, E. for 2017 and 2018 to compare both against the industry norms. b. How liquid is the firm? c. Are its managers generating an adequate operating profit on the firm's assets? d. How is the firm financing its assets? e. Are its managers generating a good return on equity? Note: 15% of sales are cash sales, with the remaining 85% being credit sales. a. Compute the following ratios for 2017 and 2018 to compare both against the industry norms. (Round the numbers to two decimal places and select your evaluation from the drop-down menu.) 2017 2018 Evaluation Industry Norm 5.00X X x Current ratio Poor KIED Pamplin Inc. Balance Sheet at 12/31/2017 and 12/31/2018 ASSETS Cash Accounts receivable Inventory Current assets Plant and equipment Less accumulated depreciation Net plant and equipment Total assets LIABILITIES AND OWNERS' EQUITY Accounts payable Notes payable current (9.00% interest) Current liabilities Bonds (8.33% interest) Total debt Owners' equity Common stock Paid-in capital Retained earnings Total owners' equity Total liabilities and owners' equity Sales (85% credit sales) Cost of goods sold Gross profit Operating expenses Depreciation $ 2,200 Operating profits Interest expense Profit before taxes Taxes (21%) Net Income (1,001) $ 35 221 $ 295 599 703 (Click on the following icon in order to copy its contents into a spreadsheet.) Pamplin Inc. Income Statement for Years Ending 12/31/2017 and 12/31/2018 2017 $ 1.201 696 $ 505 2017 $ 201 445 555 ||$ $ 1,201 $ $ 1.199 $ 2,400 $ 201 0 $ 201 602 $803 $ 1,597 $ 2,400 256 $ 249 54 195 41 154 $ 2,603 (1,201) $ 295 599 798 $ 42 200 2018 $150 428 621 $ 1,199 $ 1,402 $ 2,601 154 153 $ 307 $ $ 602 909 $ 1,692 $ 2.601 2018 $ 1,452 853 $599 I 242 357 295 $ 233 (Click on the following icon in order to copy its contents into a spreadsheet.) 2017 Industry Norm 5.00 3.00 2.20 90.00 33% Current ratio Acid-test (quick) ratio Inventory turnover Average collection period Debt ratio Times interest earned Total asset turnover Fixed asset turnover Operating profit margin Return on common equity 7.00 0.75 1.00 20.0% 9.0% 2018 its 120 TY rest) Pamplin Inc. Balance Sheet at 12/31/2017 and 12/31/2018 ASSETS Cash Accounts receivable Inventory Current assets Plant and equipment Less accumulated depreciation Net plant and equipment Total assets LIABILITIES AND OWNERS' EQUITY Accounts payable Notes payable current (9.00% interest) Current liabilities Bonds (8.33% interest) Total debt Owners' equity Common stock Paid-in capital Retained earnings Total owners' equity Total liabilities and owners' equity $ 2,200 (1,001) 295 599 703 2017 $ 201 445 555 $ 1,201 $ 1,199 $ 2,400 $ 201 0 $ 201 602 $ 803 $ 1,597 $ 2,400 opy its (Click on the following icon in order to copy its contents into a spreadsheet.) Endin $ 2,603 (1,201) 295 599 798 2018 $ 150 428 621 $ 1,199 $ 1,402 $ 2,601 $ 154 153 $ 307 602 $ 909 $ 1,692 $ 2,601 n QUITY (Click on the following icon in order to copy its contents into a spreadsheet.) Pamplin Inc. Income Statement for Years Ending 12/31/2017 and 12/31/2018 2017 ty Sales (85% credit sales) Cost of goods sold Gross profit Operating expenses Depreciation interest) Operating profits Interest expense Profit before taxes Taxes (21%) Net income $ 35 221 $ 1,201 696 $ 505 256 $ 249 54 $ $ 195 41 154 $ 42 200 2018 $ 1,452 853 $ 599 ****** 27 242 $ 357 $ 295 $ 233 (Click on the following icon in order to copy its contents into a spreadsheet.) 2017 Industry Norm 5.00 3.00 2.20 90.00 33% 7.00 0.75 1.00 20.0% 9.0% Current ratio Acid-test (quick) ratio Inventory turnover Average collection period Debt ratio Times interest earned Total asset turnover Fixed asset turnover Operating profit margin Return on common equity 2018
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Related Book For
Probability & Statistics for Engineers & Scientists
ISBN: 978-0130415295
7th Edition
Authors: Ronald E. Walpole, Raymond H. Myers, Sharon L. Myers, Keying
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