Mr. Smith comes to you as a financial analyst to advise you regarding the financial condition...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Mr. Smith comes to you as a financial analyst to advise you regarding the financial condition of his company PRISM inc. He is considering making a loan to improve the Inventing of merchandise and improvement to the local for $250,000 with a local bank. Financial status continues. The following analysis are required: 1. Ratio Analysis: Make all the possible ratios, with the data offered for the two years. Present the formulas, results with at least four decimal places to convert them to%. Comment and compare the results briefly. a. LIQUIDITY RATIOS i. Current ratio ii. Leverage rate: Composition of current assets vs. Current assets iii. Leverage rate: Composition of current assets vs. Current liabilities iiii. Acid test or Quick ratio b. ACTIVITIES AND EFECIENCIES i. Average Collection period ii. Inventory turnover iii. Net Fixed assets turnover iiii. Tot. assets turnover c. Debt ratio d. Long term debt and Total capitalization = % e. Time interest earned f. Gross profit margin g. Operating profit margin- EBIT h. Net profit margin i. Operating income returns on investment j. Return on total assets k. Return on Common Equity 2. Common Size Analysis: Express the elements and accounts of the financial statements in percentage terms. Present the results for both years and for the statements for both the Income Statement and the Balance Sheet. Use at least four decimal places to convert them to%. 3. Source and uses of Funds statement: Analysis of accounts of the states for the elaboration of a state of reconciliation of sources and uses of funds. Present changes between accounts classified as Sources (S) or Uses (U) of funds. Prepare the state of reconciliation between sources and uses. 4. Analyze the loan request. Take a decision. Must show the full calculation of how you got to the number. SALES COST OF GOODS SOLD GROSS MARGIN OPERATING EXPENSES SELLING EXP. OFFICE EXP DEPRECIATION TOTAL OPERATING EXPENSES EARNINGS BEFORE INTEREST AND TAXES INTEREST EXEPENSE EARNINGS BEFORE TAXES TAXES NET INCOME ASSETS CURRENT ASSETS Dividendos declared and paid for the 2018 were $1,500,000. CASH ACCOUNTS RECEIVABLE MARKETABLE SECURITIES INVENTORIES PLANT ASSETS LAND TOTAL CURRENTS ASSETS INTAGIBLE ASSETS BUILDING & EQUIPMENTS LESS DEPRECIATION TOTAL PLANT ASSETS PATENTS TOTAL ASSETS LIABILITIES CURRENT LIABILITIES ACCOUNTS PAYABLE NOTES PAYABLE MORTAGAGE CURRENT PORTION LONG TERM LIABILITIES TOTAL CURRENT LIABILITIES INCOME STATEMENTS 2018 MORTAGAGE PAYABLE TOTAL LIABILITIES BALANCE SHEETS STOCKHOLDERS EQUITY COMMON STOCKS PAID IN CAPITAL C-STOCKS RETAINED EARNINGS OTHER DATA: INDUSTRIES RATIOS CURRENT RATIO TOTAL STOCKSHOLDERS EQUITY TOTAL LIAB & STOOKSHOLDERS EQUITY La LIZ ACID TEST RATIO AVERAGE COLLECTIO PERIOD INVENTORY TURN OVER 2017 $17,750,000 $15,550,000 8,793,750 7,580,675 $8,956,250 $7,969,375 OPERATING PROFIT MARGIN (EBIT) NET PROFIT MARGIN REQUIRED: $ 2,150,650 $ 1,985,750 1,750,250 1,685, 350 600,000 $4,500,900 $4,455, 350 1,350,000 $1,105, 350 1,086,873 856,896 $7,018,478 $ 1,591,379 1. RATIO ANALYSIS SIZE $ 625,500 1,789,515 825,325 2,456,780 DEBTS TO TOTAL ASSETS LONG TERM DEBTS TO TOTAL CAPITALIZATION TIMES INTEREST EARNED GROSS PROFIT MARGIN 2018 $ 7,100,000 3,500,000 1,250,000 $ 2,875,000 1,081,797 352,555 $ 3,100,000 950,000 3,119,078 TOTAL ASSETS TURN OVER FIXED ASSETS TURN OVER OPERATING INCOME RETURN ON INVESTMENT (EBIT) RETURN ON TOTAL ASSETS RETURN ON COMMON EQUITY 500,000 $ 4,171,100 $3,798,275 1,350,000 $2,448,275 $ 5,097,120 9,350,000 617,180 $15,659,300 4,180,870 7,169,078 $15,659,300 1.00 TIMES 50 65 $0.74 $1.30 30 DAYS 4.5 TIMES 60% 40% 4 TIMES 50% 23.25% 12.50% 10 TIMES 15 TIMES 24.35% 15% 22.25% S 545 3. SOURCES AND USES OF FUNDS STATEMENT 4. ANALYZE THE LOAN REQUEST. TAKE DECISION 5. FOLLOW THE RUVBRICS INSTRUCTIONS FOR A/E/F IN Bb $ INDUSTRIES AVERAGE 2017 510,625 1,875,125 825,000 2,435,680 6,900,000 3,500,000 1,150,000 2,625,350 1,275,000 352,555 1,100,000 950,000 2,600,000 $ 5,646,430 9,250,000 540,500 $15,436,9:30 $4,252,905 4,533,425 6,650,600 $15,436,930 Mr. Smith comes to you as a financial analyst to advise you regarding the financial condition of his company PRISM inc. He is considering making a loan to improve the Inventing of merchandise and improvement to the local for $250,000 with a local bank. Financial status continues. The following analysis are required: 1. Ratio Analysis: Make all the possible ratios, with the data offered for the two years. Present the formulas, results with at least four decimal places to convert them to%. Comment and compare the results briefly. a. LIQUIDITY RATIOS i. Current ratio ii. Leverage rate: Composition of current assets vs. Current assets iii. Leverage rate: Composition of current assets vs. Current liabilities iiii. Acid test or Quick ratio b. ACTIVITIES AND EFECIENCIES i. Average Collection period ii. Inventory turnover iii. Net Fixed assets turnover iiii. Tot. assets turnover c. Debt ratio d. Long term debt and Total capitalization = % e. Time interest earned f. Gross profit margin g. Operating profit margin- EBIT h. Net profit margin i. Operating income returns on investment j. Return on total assets k. Return on Common Equity 2. Common Size Analysis: Express the elements and accounts of the financial statements in percentage terms. Present the results for both years and for the statements for both the Income Statement and the Balance Sheet. Use at least four decimal places to convert them to%. 3. Source and uses of Funds statement: Analysis of accounts of the states for the elaboration of a state of reconciliation of sources and uses of funds. Present changes between accounts classified as Sources (S) or Uses (U) of funds. Prepare the state of reconciliation between sources and uses. 4. Analyze the loan request. Take a decision. Must show the full calculation of how you got to the number. SALES COST OF GOODS SOLD GROSS MARGIN OPERATING EXPENSES SELLING EXP. OFFICE EXP DEPRECIATION TOTAL OPERATING EXPENSES EARNINGS BEFORE INTEREST AND TAXES INTEREST EXEPENSE EARNINGS BEFORE TAXES TAXES NET INCOME ASSETS CURRENT ASSETS Dividendos declared and paid for the 2018 were $1,500,000. CASH ACCOUNTS RECEIVABLE MARKETABLE SECURITIES INVENTORIES PLANT ASSETS LAND TOTAL CURRENTS ASSETS INTAGIBLE ASSETS BUILDING & EQUIPMENTS LESS DEPRECIATION TOTAL PLANT ASSETS PATENTS TOTAL ASSETS LIABILITIES CURRENT LIABILITIES ACCOUNTS PAYABLE NOTES PAYABLE MORTAGAGE CURRENT PORTION LONG TERM LIABILITIES TOTAL CURRENT LIABILITIES INCOME STATEMENTS 2018 MORTAGAGE PAYABLE TOTAL LIABILITIES BALANCE SHEETS STOCKHOLDERS EQUITY COMMON STOCKS PAID IN CAPITAL C-STOCKS RETAINED EARNINGS OTHER DATA: INDUSTRIES RATIOS CURRENT RATIO TOTAL STOCKSHOLDERS EQUITY TOTAL LIAB & STOOKSHOLDERS EQUITY La LIZ ACID TEST RATIO AVERAGE COLLECTIO PERIOD INVENTORY TURN OVER 2017 $17,750,000 $15,550,000 8,793,750 7,580,675 $8,956,250 $7,969,375 OPERATING PROFIT MARGIN (EBIT) NET PROFIT MARGIN REQUIRED: $ 2,150,650 $ 1,985,750 1,750,250 1,685, 350 600,000 $4,500,900 $4,455, 350 1,350,000 $1,105, 350 1,086,873 856,896 $7,018,478 $ 1,591,379 1. RATIO ANALYSIS SIZE $ 625,500 1,789,515 825,325 2,456,780 DEBTS TO TOTAL ASSETS LONG TERM DEBTS TO TOTAL CAPITALIZATION TIMES INTEREST EARNED GROSS PROFIT MARGIN 2018 $ 7,100,000 3,500,000 1,250,000 $ 2,875,000 1,081,797 352,555 $ 3,100,000 950,000 3,119,078 TOTAL ASSETS TURN OVER FIXED ASSETS TURN OVER OPERATING INCOME RETURN ON INVESTMENT (EBIT) RETURN ON TOTAL ASSETS RETURN ON COMMON EQUITY 500,000 $ 4,171,100 $3,798,275 1,350,000 $2,448,275 $ 5,097,120 9,350,000 617,180 $15,659,300 4,180,870 7,169,078 $15,659,300 1.00 TIMES 50 65 $0.74 $1.30 30 DAYS 4.5 TIMES 60% 40% 4 TIMES 50% 23.25% 12.50% 10 TIMES 15 TIMES 24.35% 15% 22.25% S 545 3. SOURCES AND USES OF FUNDS STATEMENT 4. ANALYZE THE LOAN REQUEST. TAKE DECISION 5. FOLLOW THE RUVBRICS INSTRUCTIONS FOR A/E/F IN Bb $ INDUSTRIES AVERAGE 2017 510,625 1,875,125 825,000 2,435,680 6,900,000 3,500,000 1,150,000 2,625,350 1,275,000 352,555 1,100,000 950,000 2,600,000 $ 5,646,430 9,250,000 540,500 $15,436,9:30 $4,252,905 4,533,425 6,650,600 $15,436,930
Expert Answer:
Related Book For
Financial Accounting Tools for business decision making
ISBN: 978-0470534779
6th Edition
Authors: Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso
Posted Date:
Students also viewed these accounting questions
-
You have just been hired as a financial analyst for Lydex Company, a manufacturer of safety helmets. Your boss has asked you to perform a comprehensive analysis of the companys financial statements,...
-
You are called in as a financial analyst to appraise the bonds of Olsens Clothing Stores. The $1,000 par value bonds have a quoted annual interest rate of 10 percent, which is paid semiannually. The...
-
You have just been hired as a financial analyst for Basel Industries. Unfortunately, company headquarters (where all of the firm's records are kept) has been destroyed by fire. So, your first job...
-
The city pool loses 1.0 inch of water every week due to evaporation. If the pool is 25 yards long and 12 yards wide, what is the energy required to keep the pool at 15C. If the cost of energy is...
-
National Testing Systems administers standardized tests like the SAT and the GMAT. The firm bids on various jobs (e.g., state contracts) using a simple formula. Based on the estimated number of...
-
a. How many bits are required per node to store the height of a node in an N-node AVL tree? b. What is the smallest AVL tree that overflows an 8-bit height counter?
-
Assume that Henson Corporations comparative balance sheet reported these amounts: Requirement 1. Assume that on January 2, 2010, Henson sold 1/10 of its plant and equipment for $75,500 in cash....
-
Prepare the journal entries to account for the following investment transactions of Samuelson Company: 2011 July 1 Purchased 350 shares of Bateman Company stock at $22 per share plus a brokerage fee...
-
Mth 234 I < > Upcoming Eve... K Candidate Prof... mylab.pearson.com State Farm Tal... I Job Board - Re... G the average m... I Grades for Sofi... I MATH 234 All... Do Homework... G The average m......
-
Fill in the blanks for the ABC analysis process map. Based on the process map, calculate the assigned indirect costs using the traditional method. Explain the pros and cons of this in comparison to...
-
The following information is available for Water Inc. Units Unit Cost 100 $50.00 75 150 52.00 52.50 100 55.00 Date January 1, 2020 (beginning inventory) Purchases: January 10, 2020 January 15, 2020...
-
Use a bar graph to plot the cumulative relative frequency. Use the goaltenders salaries for the 1991 NHL season given in the following table to answer question. Name Patrick Roy Ed Belfour Ron...
-
Swift Feet, Inc. can produce 1,000 pairs of sneakers per hour at maximum efficiency. There are three 8-hour shifts each day. Due to unavoidable operating interruptions, production averages 800 units...
-
Solve the linear system \(\mathbf{A x}=\mathbf{b}\) by using Gauss elimination. \(\mathbf{A}=\left[\begin{array}{cccc}-2 & 4 & 3 & 1 \\ 3 & 2 & -6 & -1 \\ 1 & -2 & -3 & 2 \\ 4 & 8 & 9 & -3\end{array}...
-
Talat owns a large retail business and prepares accounts to 31 December each year. The written down value of his plant and machinery after deducting capital allowances for the year to 31 December...
-
Solve the linear system \(\mathbf{A x}=\mathbf{b}\) by using Gauss elimination. \(\mathbf{A}=\left[\begin{array}{cccc}2 & -1 & 0 & 3 \\ 1 & 3 & 1 & -4 \\ 2 & 0 & 3 & 5 \\ -1 & -2 & 4 & 6\end{array}...
-
The speed of electron is measured to with in an uncertainty of 2 104| ms in one dimension. What is the minimum width required by the electron to be confined in an atom?
-
Compare and contrast licensing and subcontracting.
-
Phil Eubanks has just rented space in a strip mall. In this space, he will open a photography studio, to be called Picture This! A friend has advised Phil to set up a double entry set of accounting...
-
The following information is available for Gerard Corporation (a) Compute earnings per share for 2012 and 2011 for Gerard, and comment on the change. Gerard??s primary competitor, Thorpe Corporation,...
-
The three accounts shown below appear in the general ledger of Jurena Corp. during 2012. InstructionsFrom the postings in the accounts, indicate how the information is reported on a statement of cash...
-
What is the average rate of return for the values that follow? 0.90, 1.1, 1.2
-
What is the average rate of return for the values that follow? 0.80, 2.0, 5.0
-
State whether the data are symmetrical, skewed to the left, or skewed to the right. 16; 17; 19; 22; 22; 22; 22; 22; 23
Study smarter with the SolutionInn App