1. Calculate the firm's financial ratios.
2. Analyze the firm’s financial position by evaluating liquidity, activity, debt, and profitability ratios.
3. Summarize the firm’s overall financial position and make recommendations for improvement.

 

Transcribed Image Text:

Assets Current Assets Cash Accounts Receivable 300 Inventory 1100 Total Current Assets 1700 Balance Sheet ($ in Millions) 2015 Liabilities and Owners' Equity Current Liabilities Total Assets Fixed Assets Property, Plant, and 2500 Equipment Less Accumulated Depreciation Net Fixed Assets Current ratio Financial Ratios Problem 300 Accounts Payable 200 Notes Payable 300 Total Current Liabilities 500 Long-Term Liabilities Long-Term Debt Times interest earned Gross profit margin Operating profit margin Net profit margin 1400 Common Stock ($1 Par) 1100 Capital Surplus Retained Earnings 100 Total Long-Term Liabilities 100 Owners' Equity 2015 Quick ratio Inventory turnover (times) Average collection period Total asset turnover (times) Debt ratio 600 1100 Total Owners' Equity 2200 2800 Total Liab. and Owners' 2800 Equity Return on assets (ROA) Return on common equity (ROE) 500 Income Statement ($ in Millions) Sales Cost of Goods Sold Administrative Expenses Depreciation Earnings Before Interest and Taxes Interest Expense Taxable Income Taxes Net Income Dividends Addition to Retained Earnings 2015 6100 500 Number of Shares Outstanding (Milions) Price per Share 1200 331 4069 0 4069 1695 2374 1654 720 Other Information 500 11.49 Assets Current Assets Cash Accounts Receivable 300 Inventory 1100 Total Current Assets 1700 Balance Sheet ($ in Millions) 2015 Liabilities and Owners' Equity Current Liabilities Total Assets Fixed Assets Property, Plant, and 2500 Equipment Less Accumulated Depreciation Net Fixed Assets Current ratio Financial Ratios Problem 300 Accounts Payable 200 Notes Payable 300 Total Current Liabilities 500 Long-Term Liabilities Long-Term Debt Times interest earned Gross profit margin Operating profit margin Net profit margin 1400 Common Stock ($1 Par) 1100 Capital Surplus Retained Earnings 100 Total Long-Term Liabilities 100 Owners' Equity 2015 Quick ratio Inventory turnover (times) Average collection period Total asset turnover (times) Debt ratio 600 1100 Total Owners' Equity 2200 2800 Total Liab. and Owners' 2800 Equity Return on assets (ROA) Return on common equity (ROE) 500 Income Statement ($ in Millions) Sales Cost of Goods Sold Administrative Expenses Depreciation Earnings Before Interest and Taxes Interest Expense Taxable Income Taxes Net Income Dividends Addition to Retained Earnings 2015 6100 500 Number of Shares Outstanding (Milions) Price per Share 1200 331 4069 0 4069 1695 2374 1654 720 Other Information 500 11.49

Answer rating: 100% (QA)

1 FINANCIAL RATIOS a LIQUIDITY RATIOS Current ratio Current assetsCurrent liabilities 1700500 340 Quick ratio CashAccounts receivableCurrent liabiliti... View the full answer