You have been hired as a financial analyst for Cranwell Banking Institute (CBI), and your
team is working on an independent assessment of Petsin Inc. Petsin Inc. is a firm that
specializes in the production of pet supplies from China. Your assistant has provided you
with the following data derived from the financial statements of Petsin Inc and their
industry.

Required:
a. In the annual report to the shareholders, the CEO of Petsin Inc wrote, “2019 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
correct? Explain and use only relevant information in your analysis. (50%)

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. (50%)
 

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2019- Ratio 2019 2018 2017 Industry Average Long-term debt 0.45 0.40 0.35 0.35 Inventory Turnover 62.65 42.42 32.25 53.25 Total Assets 0.25 0.014 0.018 0.015 Days' sales in receivables 113 98 94 130.25 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 0.9 4.375 4.45 4.65 Equity Multiplier 1.75 1.85 1.90 1.88 2019- Ratio 2019 2018 2017 Industry Average Long-term debt 0.45 0.40 0.35 0.35 Inventory Turnover 62.65 42.42 32.25 53.25 Total Assets 0.25 0.014 0.018 0.015 Days' sales in receivables 113 98 94 130.25 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 0.9 4.375 4.45 4.65 Equity Multiplier 1.75 1.85 1.90 1.88