Imperial Electronics Ltd. is a publicly owned company with 100,000 common shares outstanding. At the last executive committee meeting, Sandra Redgrave, CEO of the company, informed the board members of the economic slowdown that she anticipated during the next several years. She also told them that several U.S. firms were considering becoming more aggressive in the industry, particularly in the Canadian market. Because of these external threats, management of Imperial Electronics Ltd. anticipates difficult times ahead. Company management is now watching its financial ratios closely to keep the firm under control.
On the basis of the information contained in the company€™s financial statements, calculate and comment on Imperial Electronics Ltd.€™s December 31, 2012, financial ratios by comparing them with the industry average. The common shares are valued on the stock market at $120.
a. Current ratio
b. Quick ratio
c. Debt-to-total-assets ratio
d. Debt-to-equity ratio
e. Times-interest-earned ratio
f. Fixed-charges coverage ratio
g. Average collection period
h. Inventory turnover ratio
i. Capital assets turnover ratio
j. Total assets turnover ratio
k. Profit margin on revenue ratio
l. Return on revenue ratio
m. Return on total assets ratio
n. Return on equity ratio
o. Earnings per share
p. Price/earnings ratio
In July 2013, management of Imperial Electronics Ltd. is planning to invest $3,000,000 to modernize its capital assets and expand. The management committee is considering borrowing funds from external sources. However, before meeting the investors, the committee wants to examine the amount that could be generated internally before June 30, 2013.
Industry financial ratios are as follows:

a. Current ratio .............1.95 times
b. Quick ratio .............1.03 times
c. Debt-to-total-assets ratio .........55%
d. Debt-to-equity ratio ..........1.21 times
e. Times-interest-earned ratio ........6.43 times
f. Fixed-charges coverage ratio ......4.51 times
g. Average collection period .......35.00 days
h. Inventory turnover ratio ..........7.00 times
i. Capital assets turnover ratio ........5.10 times
j. Total assets turnover ratio ...........2.90 times
k. Profit margin on revenue ratio .......9.10%
l. Return on revenue ratio ...............2.10%
m. Return on total assets ratio ........6.00%
n. Return on equity ratio ................21.00%
o. Earnings per share .....................$8.50
p. Price/earnings ratio ...................10.30 times
Assuming that the company is just as efficient as the industry in managing its inventories and trade receivables, calculate the amount of cash it would generate by June 30, 2013. Also, assume that in 2013 revenue will increase by 9%, return on revenue will be 5%, depreciation will increase to $400,000, and cost of sales in relation to revenue will improve to72%.

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Imperial Electronics Ltd Statement of Income For the yea r ended December 31, 2012 i1n R evenue Cost of sales Gross profit Expenses: 30,000,000 (23,000,000) 7,000,000 Distribution costs (2,500,000) Lease (125,000) (300,000) 1,700, Depreciation Administrative expenses Total expenses Finance costsS Total Profit before taxes Income tax expense Profit for the year (4,625.000) (400,000 5,025,000) 1,975,000 Imperial Electronics Ltd. Statement of Financial Position As at December 31, 2012 iIn Non-current assets Property, plant, and equipment Accumulated depreciation Total non-current assets Equity 8.200,000 Common shares 2,500,000 3,300,000 5,800,000 4,200,000 2,000,000 Retained earnings 6,200,000 Total equity Long-term borrowings Current liabilities Current assets Inventories Trade receivables Prepaid expenses Term deposits Cash 4,100,000 Trade and other payales 2,500,000 ,600,000 220,000 200,000 Currt income tax payable 80,000 4,400,000 8,600,000 liabiliies 14 400,000 3,500,000 Nos payable 250,000 Accruals 150,000 8,200,000 14.400,000 Total current liabilities Total liabilities Total equity and Total current assets Total assets