Case Study The following information for MMM Corporation: Income Satatements Sales Cost of goods sold Gross...

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Case Study The following information for MMM Corporation: Income Satatements Sales Cost of goods sold Gross profits Operating expenses: Selling and G&A expenses Depreciation expenses Total operating expenses EBIT Interest expense Earnings before taxes Income taxes Net Income dividends retained earning Balance Sheets: Cash Accounts receivable Inventories Other current assets Total current assets Gross fixed assets Accumulated depreciation Net fixed assets Total assets LIABILITIES (DEBT) AND EQUITY Accounts payable Short-term notes payable Total current liabilities Long-term debt Total liabilities Common equity Common stock (par & paid in capital) Retained earnings Total common equity Total liabilities and equity shares outstanding market value per share $ 2019 5,700 3,700 2,000 820 340 1,160 840 200 640 230 410 120 290 2019 300 $ 700 600 125 1,725 4,650 (1,700) 2,950 4,675 400 250 650 1,250 1,900 1,100 1,675 2,775 4,675 150 36 $ 2020 5,400 3,600 1,800 780 500 1,280 520 275 245 65 180 120 60 2020 495 $ 915 $ 780 $ 160 $ 2,350 $ 4,950 $ (2,200) $ 2,750 $ 5,100 $ 640 $ 300 $ 940 $ 1,325 $ 2,265 $ 1,100 $ 1,735 $ 2,835 $ 5,100 $ 150 16 change % -5.26% -2.70% -10.00% -4.88% 47.06% 10.34% -38.10% 37.50% -61.72% -71.74% -56.10% Change S 195 215 180 35 625 300 (500) (200) 425 240 50 290 75 365 60 60 425 Ratios: Financial ratios Current ratio Acid-test ratio Days in receivables Days in inventory Operating return on assets Operating profit margin Total asset turnover Fixed asset turnover Debt ratio Times interest earned Return on equity Earnings per share Dividends per share Price/earnings ratio Book value per share Market/book ratio $ $ $ 2019 2.65 1.73 44.82 59.19 17.97% 14.74% 1.22 1.93 0.41 4.20 14.77% 2.73 $ 0.80 $ 13.17 18.50 $ 1.95 2020 2.50 1.67 61.85 79.08 10.20% 9.63% 1.06 1.96 0.44 1.89 6.35% 1.20 0.80 13.33 18.90 0.85 Required: a. What conclusions can you make from the analysis? (at least 7 Points) b. What recommendations would you make to management? (at least 7 Points) Case Study The following information for MMM Corporation: Income Satatements Sales Cost of goods sold Gross profits Operating expenses: Selling and G&A expenses Depreciation expenses Total operating expenses EBIT Interest expense Earnings before taxes Income taxes Net Income dividends retained earning Balance Sheets: Cash Accounts receivable Inventories Other current assets Total current assets Gross fixed assets Accumulated depreciation Net fixed assets Total assets LIABILITIES (DEBT) AND EQUITY Accounts payable Short-term notes payable Total current liabilities Long-term debt Total liabilities Common equity Common stock (par & paid in capital) Retained earnings Total common equity Total liabilities and equity shares outstanding market value per share $ 2019 5,700 3,700 2,000 820 340 1,160 840 200 640 230 410 120 290 2019 300 $ 700 600 125 1,725 4,650 (1,700) 2,950 4,675 400 250 650 1,250 1,900 1,100 1,675 2,775 4,675 150 36 $ 2020 5,400 3,600 1,800 780 500 1,280 520 275 245 65 180 120 60 2020 495 $ 915 $ 780 $ 160 $ 2,350 $ 4,950 $ (2,200) $ 2,750 $ 5,100 $ 640 $ 300 $ 940 $ 1,325 $ 2,265 $ 1,100 $ 1,735 $ 2,835 $ 5,100 $ 150 16 change % -5.26% -2.70% -10.00% -4.88% 47.06% 10.34% -38.10% 37.50% -61.72% -71.74% -56.10% Change S 195 215 180 35 625 300 (500) (200) 425 240 50 290 75 365 60 60 425 Ratios: Financial ratios Current ratio Acid-test ratio Days in receivables Days in inventory Operating return on assets Operating profit margin Total asset turnover Fixed asset turnover Debt ratio Times interest earned Return on equity Earnings per share Dividends per share Price/earnings ratio Book value per share Market/book ratio $ $ $ 2019 2.65 1.73 44.82 59.19 17.97% 14.74% 1.22 1.93 0.41 4.20 14.77% 2.73 $ 0.80 $ 13.17 18.50 $ 1.95 2020 2.50 1.67 61.85 79.08 10.20% 9.63% 1.06 1.96 0.44 1.89 6.35% 1.20 0.80 13.33 18.90 0.85 Required: a. What conclusions can you make from the analysis? (at least 7 Points) b. What recommendations would you make to management? (at least 7 Points)

Answer rating: 100% (QA)

A Con clusions 1 The current ratio decreased from 2 65 in 2019 to 2 50 in 2020 indicating that M MM Corporation s ability to pay its short term debts ... View the full answer