BA620 Managerial Finance

Group Problem Set 1 (100 Points)

Instructions:

1. As a group, complete the following activities in good form. Use excel or word only.Please do not use any other format such as PDF. Provide all supporting calculations to show how you arrived at your numbers
2. Add only the names of group members who participated in the completion of this assignment.
3. Submit only one copy of your completed work via Moodle. Do not send it to me by email.
4. Due: No later than the last day of Module 3. Please note that your professor has the right to change the due date of this assignment.

Finance data of Trinity Computer for the year ending 2022 and 2021

Items	2022	2021
Sales	$155,000	145,000
Cash	40,000	24,000
Selling/Admin Expenses	45,700	35,000
Retained Earnings	57,000	51,500
Long-term debt	25,000	8,000
Cost of goods sold	83,000	79,000
Depreciation	18,000	15,000
Long-term investments	90,000	89,000
Gross Fixed Assets	67,000	61,000
Interest Expenses	2,000	70,000
Shares outstanding ($1 par)	112,000	97,000
Market Price of stock	7.50	6.00
Accounts Receivable	48,000	41,500
Accounts payable	13,000	11,000
Inventory	43,000	34,500
Taxes Payable	4,000	3,500
Accumulated Depreciation	41,000	23,000
Tax Rate	12.7%	12.7%

Instructions:

As a group, complete the following activities using the financial information above:

Part 1: Financial Statements

1. Prepare the income statement for 2022 and 2021. Include statement of retained earnings for 2022. Round your taxes (dollars) to the nearest whole number.
2. Prepare the balance sheet for 2022 and 2021
3. Prepare Common-Size financial statements for the income statement and balance sheet for 2022 and 2021
4. Prepare Statement of Cash Flows for 2022

Part 2: Financial Statement Analysis

1. Based on your financial statements (from Part 1), calculate the following ratios for the two years. Show all your calculations in good form. Show your formulas. If you use excel, each calculation needs to show the excel formula

Current ratio

Quick ratio

Inventory turnover (times)

Accounts receivable turnover (days)

Total asset turnover (times)

Debt ratio

Times interest earned

Gross profit margin

Net profit margin

Return on total assets

Return on equity

Calculate earnings per share

P/E ratio

Return on equity using DuPont Analysis

1. Comments on the trend of each ratio by comparing 2022 to 2021 ratios. In addition to commenting on the trends of the ratios, explain the meaning of each of ratio.
2. What is DuPont Analysis? As a manager, how would you use Dupont Analysis in the overall evaluation of the financial performance of a firm? Support your comments with appropriate in-text citations and references.

1. Find industry ratios for 2022 similar to the ones you calculated. Compare the industry ratios you found to the ratios you calculated. Based on the industry average, how is Trinity Computer doing financially? Please note that this company manufacture and sells computers. The industry average you use should be from the computer sector.

1. Please organize and group your ratios and calculations as follows:

Liquidity ratios (calculations and explanations)
Current Ratio
Quick Ratio
Asset Management ratios (calculations and explanations)
Inventory Turnover
Accounts Receivable Turnover
Fixed Asset Turnover
Total Asset Turnover
Debt Management ratios (calculations and explanations)
Debt Ratio
Times Interest Earned
Profitability ratios (calculations and explanations)
Profit Margin Return on Assets Return on Equity (using DuPont) Market Value ratios (calculations and explanations) Price-to Earnings Ratio

Side Note: Please note that this is not the type of assignment where the assignment is divided, and each student completes the part that is assigned. Each person in your group need to participate fully in the completion of each part of the assignment.