Copy the Stetson Skydiving Adventures financial statements from Problem 1 in Chapter 2 into a new workbook.

Question:

a. Set up a ratio worksheet similar to the one in Exhibit 4-4, page 124, and calculate all of the ratios for Stetson Skydiving Adventures.

b. Identify at least two areas of potential concern using the ratios. Identify at least two areas that have shown improvement.

c. In 2011 Stetson Skydiving Adventure's ROE increased. Explain, in words, why this increase occurred using the Du Pont method as shown in equation (4-29).

d. Stetson Skydiving Adventures has shown an accounting profit in each of the past two years. Calculate their economic profit for these years and compare it to net income. Assume that the weighted average cost of capital is 11%.

e. Using Altman's model for privately held firms, calculate the Z-score for Stetson Skydiving Adventures. Does it appear that the firm is in imminent danger of bankruptcy?

Financial Statements
Financial 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... Cost Of Capital
Cost of capital refers to the opportunity cost of making a specific investment . Cost of capital (COC) is the rate of return that a firm must earn on its project investments to maintain its market value and attract funds. COC is the required rate of...