Question: PLEASE HELP ME ASAP!! No need to answer b. Donna Jamison was recently hired as a financial analyst by Computron Industries, a manufacturer of electronic

PLEASE HELP ME ASAP!! No need to answer b.

PLEASE HELP ME ASAP!! No need to answer b. Donna Jamison wasrecently hired as a financial analyst by Computron Industries, a manufacturer ofelectronic components. Her first task was to conduct a financial analysis ofthe firm covering the last two years. To begin, she gathered the

Donna Jamison was recently hired as a financial analyst by Computron Industries, a manufacturer of electronic components. Her first task was to conduct a financial analysis of the firm covering the last two years. To begin, she gathered the following financial statements and other data. Balance Sheets 2022 2021 Assets Cash Accounts receivable Inventories Total current assets Gross fixed assets Less : Accumulated depreciation Net fixed assets Total assets $ 52,000 402,000 836,000 $1,290,000 527,000 166,200 $ 57,600 351,200 715,200 $1,124,000 491,000 146,200 $ 344,800 $1,468,800 $ 360,800 $1,650,800 Liabilities and Equity Accounts payable Notes payable Accruals Total current liabilities Long-term debt Total liabilities Common stock (100,000 shares) Retained earnings Total equity Total liabilities and equity $ 175,200 225,000 140,000 $ 540,200 424,612 $ 964,812 460,000 225,988 $ 685,988 $1,650,800 $ 145,600 200,000 136,000 $ 481,600 323,432 $ 805,032 460,000 203,768 $ 663,768 $1,468,800 (Continued) Income Statements 2022 Sales $3,850,000 Cost of goods sold (3,250,000) Other expenses ( 430,300) Depreciation ( 20,000) Total operating costs ($3,700,300) Earnings before interest and taxes (EBIT) $ 149,700 Interest expense ( 76,000) Earnings before taxes (EBT) $ 73,700 Taxes (40%) (29,480) Net income $ 44,220 Earning per share (EPS) $ 0.442 Statement of Cash Flows (2022) Operating Activities Net income (NI) $ 44,220 Additions to Ni (sources of cash) Depreciation 20,000 Increase in accounts payable 29,600 Increase in accruals 4,000 Subtractions from NI (uses of cash) Increases in accounts receivable (50,800) Increase in inventories (120,800) Net cash flow from operations 2021 $3,432,000 (2,864,000) ( 340,000) ( 18,900) ($3,222,900) $ 209,100 ( 62,500) $ 146,600 (58,640) $ 87,960 $ 0.880 $(73,780) Long-Term Investing Activities Investment in fixed assets $( 36,000) $ 25,000 101,180 ( 22,000) Financing Activities Increase in notes payable Increase in long-term debt Payment of cash dividends Net cash flow from financing Net change in cash Cash at beginning of the year Cash at end of the year $104,180 $( 5,600) 57,600 $ 52,000 Other Data December 31 stock price Number of shares Dividends per share Lease payments Industry average data for 2021: 2022 $ 6.00 100,000 $0.22 $40,000 2021 $ 8.50 100,000 $0.22 $40,000 (Continued) Ratio Current Quick Inventory turnover Days sales outstanding (DSO) Fixed assets turnover Total assets turnover Debt ratio Time interest earned (TIE) Fixed charge coverage Net profit margin Return on assets (ROA) Return on equity (ROE) Price/earnings Market/book Industry Average 2.7x 1.0X 6.0X 32.0 days 10.7% 2.6X 50.0% 2.5% 2.1 x 3.5% 9.1% 18.2% 14.2x 1.4x c. Assume you are Donna Jamison's assistant and she has asked you to help her prepare a report that evaluates the company's financial condition. Answer the following questions: a. What can you conclude about the company's g. Calculate Computron's market value ratiosthat financial condition from its statement of cash is, its price/earnings ratio and its market/book flows? ratio. What do these ratios tell you about investors' b. What is the purpose of financial ratio analysis, and opinions of the company? what are the five major categories of ratios? h. Use the DuPont equation to provide a summary and What are Computron's current and quick ratios? overview of Computron's financial condition. What What do they tell you about the company's liquidity are the firm's major strengths and weaknesses? position? i. How would an improvement in one of the ratios- d. What is Computron's inventory turnover, day's sales say, the DSOwould affect Computron's stock outstanding, fixed assets turnover, and total assets price. For example, if the company could improve its turnover ratios? How does the firm's utilization of collection procedures and thereby lower the DSO assets stack up against that of the industry? from 38.1 days to 27.8 days, how would that change "ripple through" the financial statements and What are the firm's debt, times interest earned, and influence the stock price? fixed charge coverage ratios? How does Computron compare to the industry with respect to financial j. Although financial statement analysis can provide leverage? What conclusions can you draw from useful information about a company's operations these ratios? and its financial condition, this type of analysis does have some potential problems and limitations, and f. Calculate and discuss the firm's profitability ratios, it must be used with care and judgment. What are that is, its net profit margin, return on assets (ROA), some of the problems and limitations? and return on equity (ROE)

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!