a. Calculate the firms 2009 financial ratios, and then fill in the preceding table. b. Analyze the

a. Calculate the firm’s 2009 financial ratios, and then fill in the preceding table.

b. Analyze the firm’s current financial position from both a cross-sectional and a time-series viewpoint. Break your analysis into evaluations of the firm’s liquidity, activity, debt, profitability, and market.

c. Summarize the firm’s overall financial position on the basis of your findings in part b.

Tern Spiro, an experienced budget analyst at Martin Manufacturing Company, has been charged with assessing the firm’s financial performance during 2009 and its financial position at year-end 2009. To complete this assignment, she gathered the firm’s 2009 financial Statements (below and on page 99). In. addition, Tern obtained the firm’s ratio values for 2007 and 2008, along with the 2009 industry average ratios (also applicable to 2007 and 2008). These are presented in the table on page100.

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Martin Manufacturing Company Histocical and Industry Average Ratios ActualActualActualIndustry average 2007200820092009 Ratio Current ratio Quick ratio Inventory turnover (times) Average coliection period Total asset turnover (times) Debt raric Times interest earned ratio Gross profit margin Net profit margin Rerurn on total assets (ROA) Return on common equity (ROE) Price/earnings (P/E) ratio Market/book (M/B) ratio 1.5 1.2 10.2 46 days 2.0 24.5% 2.5 26.0% 1.7 1.0 5.2 1.8 0.9 5.0 50.7 days S5.8 days 1.5 45.8% 2.2 27.590 1.1% 1.5 54.3% 1.9 28.0% 1.0% 1.5% 3.3% 38.7 1.1 2.4% 32% 3.1% 33.5 1.0 43.4 1.2