Using the following financial statements for Pamplin, Inc:

a. Compute the following ratios for both 2012 and 2013 using the financial statements that follow.

Industry Norm

Current ratio ............5.00

Acid-test (quick) ratio .........3.00

Inventory turnover ...........2.20

Average collection period .........90 days

Debt ratio .............0.33

Times interest earned ..........7.00

Total asset turnover ..........0.75

Fixed asset turnover .........1.00

Operating profit margin .........20%

Return on equity ..........9%

b. Compare Pamplin’s financial ratios to the industry norms listed above and assess each of the following attributes of the firm’s financial condition: liquidity, capital structure, asset management efficiency, and profitability.

Pamplin, Inc.

Balance Sheets

Pamplin,Inc.

Income Statements Sales (all credit) Operating expenses (cash) Depreciation expense Total operating expenses Net operating income Interest expense Earnings before taxes 3