Ratio analysis

Problem Solving Questions You have been hired as an analyst for Mellon Bank and your team is working on an independent assessment of Daffy Duck Food Inc. (DDF Inc.) DDP Inc. is a firm that specializes in the production of freshly imported farm products from France. Your assistant has provided you with the following data for DDF Inc and their industry. 2018- Ratio 2018 2017 2016 Industry Average Long-term debt 0.45 0.40 0.35 0.35 Inventory Turnover 62.65 42.42 32.25 53.25 Depreciation/ Total Assets 0.25 0.014 0.018 0.015 Days' sales in receivables 113 98 130.25 Debt to Equity 0.75 0.85 0.90 0.88 Profit Margin 0.082 0.07 0.06 0.075 Total Asset Turnover 0.54 0.65 0.70 0.40 Quick Ratio 1.028 1.03 1.029 1.031 Current Ratio 1.33 1.21 1.15 1.25 Times Interest Earned 4.375 4.45 4.65 Lquity Multiplier 1.75 1.85 1.90 1.88 a. In the annual report to the shareholders, the CEO of DDF Inc wrote, "2018 was a good year for the firm with respect to our ability to meet our short-term obligations. We had higher liquidity largely due to an increase in highly liquid current assets (cash, account receivables and short-term marketable securities)." Is the CEO correct7 Explain and use only relevant information in your analysis. b. What can you say about the firm's asset management? Be as complete as possible given the above information, but do not use any irrelevant information. c. You are asked to provide the shareholders with an assessment of the firm's solvency and leverage. Be as complete as possible given the above information, but do not use any irrelevant information