The Jimenez Corporation's forecasted 2014 financial statements follow, along with some industry average ratios. Calculate Jimenez's 2014
Question:
The Jimenez Corporation's forecasted 2014 financial statements follow, along with some industry average ratios. Calculate Jimenez's 2014 forecasted ratios, compare them with the industry average data, and comment briefly on Jimenez's projected strengths and weaknesses.
Jimenez Corporation: Forecasted Balance Sheet as of December 31, 2014
Assets
Cash..............................................................................................$ 72,000
Accounts receivable.............................................................................439,000
Inventories.......................................................................................894,000
Total current assets.........................................................................$ 1,405,000
Fixed assets......................................................................................431,000
Total assets..................................................................................$ 1,836,000
Liabilities and Equity
Accounts payable.............................................................................$ 332,000
Notes payable....................................................................................100,000
Accruals..........................................................................................170,000
Total current liabilities.......................................................................$ 602,000
Long-term debt.................................................................................404,290
Common stock..................................................................................575,000
Retained earnings...............................................................................254,710
Total liabilities and equity.................................................................$ 1,836,000
Depreciation and amortization................................................................159,000
Earnings before taxes (EBT)................................................................$ 180,680
Taxes (40%).......................................................................................72,272
Net income.....................................................................................$ 108,408
EPS...................................................................................................$ 4.71
Cash dividends per share.........................................................................$ 0.95
P/E ratio................................................................................................5.0
Market price (average)..........................................................................$ 23.57
Number of shares outstanding..................................................................23,000
Industry Financial Ratios (2013)a
Quick ratio.............................................................................................1.0
Current ratio...........................................................................................2.7
Inventory turnover....................................................................................7.0
Days sales outstandingc.....................................................................32.0 days
Fixed assets turnover...............................................................................13.0
Total assets turnover.................................................................................2.6
Return on assets....................................................................................9.1%
Return on equity.................................................................................18.2%
Profit margin on sales.............................................................................3.5%
Debt-to-assets ratio..............................................................................21.0%
Liabilities-to-assets ratio.......................................................................50.0%
P/E ratio..............................................................................................6.0
Price/Cash flow ratio...............................................................................3.5
Market/Book ratio..................................................................................3.5
Industry average ratios have been constant for the past 4 years.
Based on year-end balance sheet figures.
Calculation is based on a 365-day year.
Financial StatementsFinancial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial... Balance Sheet
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Corporate Finance A Focused Approach
ISBN: 978-1133947530
5th edition
Authors: Michael C. Ehrhardt, Eugene F. Brigham
