Use the financial statements of Fox Manufacturing Company for the year ended December 31, 2015, along with
Question:
Use the financial statements of Fox Manufacturing Company for the year ended December 31, 2015, along with industry average ratios, to:
for the year ended December 31, 2015 | |
sales revenue | $604,000 |
Less: cost of goods sold | 461000 |
Gross profit | $143,000 |
Less: Operating expenses | |
General and adminsitrative expenses | $29,900 |
depreciation expense | 29500 |
Total operating expenses | 59400 |
operating benefits | $83,600 |
Less: Interest expense | 9500 |
Net profit before taxes | $74,100 |
Less taxes | 27100 |
Net earnings after taxes (earnings available to common stockholders) | $47,000 |
Earnings Per Share (EPS) | $2.30 |
Balance general de Fox Manufacturing Company | |
December 31, 2015 | |
Assets | |
Money | $15,400 |
Negotiable values | 6700 |
accounts receivable | 33500 |
inventories | 82300 |
Total current assets | $ 137,900 |
net fixed assets | 269000 |
total assets | $406,900 |
Liabilities and Equity | |
Accounts payable | $56,700 |
Pay | 12700 |
accumulations | 5300 |
Total current liabilities | $74,700 |
long term debt | $ 149,400 |
Common Stock Capital (20,000 shares outstanding) | $109,500 |
Retained earnings | 73300 |
Equity of total shareholders | $ 182,800 |
Total liabilities and stockholders' equity | $406,900 |
Industry average, 2015 | |
Radio actual | 2.4 |
fast reason | 0.9 |
Inventory sales volume* | 4.53 times |
Average collection period* | 35.3 days |
total asset turnover | 1.03 |
debt ratio | 0.21 |
times interest is earned | 13.1 |
gross profit margin | 0.205 |
operating profit margin | 0.142 |
net profit margin | 0.1 |
Return on Total Assets (ROA) | 0.105 |
Return on Common Equity (ROE) | 0.185 |
Earnings Per Share (EPS) | $3.34 |
*Based on a 365-day year and year-end figures. |
Required:
The debt ratio is
(Round to two decimal places.)
Fox Manufacturing's debt ratio is
average. (Select from drop down menu).
The relationship between accrued interest and times is
.
(Round to one decimal).
The ratio of interest earned by Fox Manufacturing is
average. (Select from drop down menu).
The gross profit margin is
.
(Round to three decimal places.)
Fox Manufacturing's gross profit margin is
average. (Select from drop down menu).
The operating profit margin is
.
(Round to three decimal places.)
Fox Manufacturing's operating profit margin is
average. (Select from drop down menu).
The net profit margin is
.
(Round to three decimal places.)
Fox Manufacturing's net profit margin is
average. (Select from drop down menu).
The return on total assets (ROA) is
.
(Round to three decimal places.)
Fox Manufacturing's return on total assets (ROA) is
average. (Select from drop down menu).
The return on common equity (ROE) is
.
(Round to three decimal places.)
Fox Manufacturing's return on common equity (ROE) is
average. (Select from drop down menu).
Fox Manufacturing's earnings per share is
average. (Select from drop down menu).
b. Summarize your findings and make recommendations. (Select from the drop down menus).
Fox Manufacturing Company needs improvements to its
proportions and possibly a reduction in your total
.
The company is more leveraged than the average company in its industry and therefore has more financial risk. The company is below average, but is bolstered by the use of debt in the capital structure, resulting in a higher ROE.
Principles Of Managerial Finance
ISBN: 978-0136119463
13th Edition
Authors: Lawrence J. Gitman, Chad J. Zutter