In$-$class Problem Solving $4($Chapter $10$: Financial Analysis$)$

Profitability & Asset Utilization Ratios:

Cascadia Metals has $$1\mathrm{.}7$ million in assets and $$0\mathrm{.}7$ million in total debt. They report net income of $$0\mathrm{.}17$ million in $2022.$

a$.$ What is their ROA $($return on assets$)?$

b$.$ What is their ROE $($return on shareholders$$ equity$)?$

c$.$ If the firm has an asset turnover ratio of $3\mathrm{.}00$ times, what is their profit margin?

Profitability Ratios:

Drone Delivery Canada is considering expanding into a new product line. The expansion will need a new asset support of $$750,000.$ It is estimated that they can generate $$2\mathrm{.}25$ million in annual sales, with a $7\%$ profit margin. What would net income and return on assets $($investment$)$ be for the year?

Profitability & Asset Utilization Ratios:

Isaac Instruments has assets of $$5,380,000$ and turns over its assets $2\mathrm{.}6$ times per year. ROA is $6\%.$ What is their profit margin?

Asset Utilization Ratios:

Freshbooks Inc. has sales of $$1\mathrm{.}7$ million, and $22\%$ of the sales are for cash. The year$-$end accounts receivable balance is $$160,000.$ What is the average collection period?

Debt Utilization Ratios:

Using the below information from Aquatic Informatics$$ income statement, calculate their Times Interest Earned Ratio and Fixed Coverage Ratio.

Aquatic Informatics

Sales $$251,000$

Cost of goods sold $135,000$

Gross profit $116,000$

Fixed charges $($other than interest$)24,300$

Income before interest and taxes $91,700$

Interest $19,400$

Income before taxes $72,300$

Taxes $25,305$

Income after taxes $$46,995$