Jimenez Corporation: Forecasted Balance Sheet as of December 31, 2011

Assets
Cash	$72,000
Accounts receivable	439,000
Inventories	894,000
Total current assets	$1,405,000
Fixed assets	431,000
Total assets	$1,836,000
Liabilities and Equity
Accounts and notes payable	$432,000
Accruals	170,000
Total current liabilities	$602,000
Long-term debt	404,290
Common stock	575,000
Retained earnings	254,710
Total liabilities and equity	$1,836,000

Jimenez Corporation: Forecasted Income Statement for 2011

Sales	$4,290,000
Cost of goods sold	3,580,000
Selling, general, and administrative expenses	370,320
Depreciation	159,000
Earnings before taxes (EBT)	$180,680
Taxes (40%)	72,272
Net income	$108,408
Per-Share Data
EPS	$4.71
Cash dividends per share	$0.95
P/E ratio	5
Market price (average)	$23.57
Number of shares outstanding	23,000
Industry Financial Ratio (2010)*
Quick ratio	1.0
Current ratio	2.7
Inventory turnover**	7.0
Days sales outstanding***	32 days
Fixed assets turn over**	13.0
Total assets turnover**	2.6
Return on assets	9.1%
Return on equity	18.2%
debt to asset ratio	50.0%
Profit margin on sales	3.5%
P/E ratio Liability to assets ratio	6.0 50%
P/cash flow ratio	3.5
*Industry average ratios have been constant for the past 4 years.
**Based on year-end balance sheet figures.
***Calculation is based on a 365-day year.

Calculate Jimenez's 2011 forecasted ratios, compare them with the industry average data, and comment briefly on Jimenez's projected strengths and weaknesses. Round DSO to the nearest whole. Round the other ratios to one decimal place.

Ratios	Firm	Industry	Comment
Quick ratio	________	1.0	_________________
Current ratio	________	2.7	_________________
Inventory turnover	________	7.0	_________________
Days sales outstanding	________ days	32 days	_________________
Fixed assets turnover	________	13.0	_________________
Total assets turnover	________	2.6	_________________
Return on assets	________ %	9.1%	_________________
Return on equity	________ %	18.2%	_________________
Debt to asset ratio liability to asset ratio	________ %	21.0% 50.0%	________________ _
Profit margin on sales	________ %	3.5%	_________________
EPS	$4.71	n.a.	--
Stock Price	$23.57	n.a.	--
P/E ratio	________	6.0	_________________
P/CF ratio	________	3.5	_________________
M/B ratio	0.65	n.a.	--

So, the firm appears to be _________________ managed.

Answer rating: 100% (QA)

Ratios Firm Industry Comments Quick ratio 08 10 The firm has fewer liquid assets per dollar of current liabilities Current ratio 23 27 The firm has ad... View the full answer