The Corrigan Corporation’s 2020 and 2021 financial statements follow, along with some industry average ratios. Corrigan is exempt from the interest deduction limitation because its average gross revenues for the prior 3 years was less than $25 million.

So 100% of its interest expense is deductible.

a. Assess Corrigan’s liquidity position, and determine how it compares with peers and how the liquidity position has changed over time.

b. Assess Corrigan’s asset management position, and determine how it compares with peers and how its asset management efficiency has changed over time.

c. Assess Corrigan’s debt management position, and determine how it compares with peers and how its debt management has changed over time.

d. Assess Corrigan’s profitability ratios, and determine how they compare with peers and how its profitability position has changed over time.

e. Assess Corrigan’s market value ratios, and determine how its valuation compares with peers and how it has changed over time. Assume the firm’s debt is priced at par, so the market value of its debt equals its book value.

f. Calculate Corrigan’s ROE as well as the industry average ROE, using the DuPont equation. From this analysis, how does Corrigan’s financial position compare with the industry average numbers?
g. What do you think would happen to its ratios if the company initiated cost-cutting measures that allowed it to hold lower levels of inventory and substantially decreased the cost of goods sold? No calculations are necessary. Think about which ratios would be affected by changes in these two accounts.

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Corrigan Corporation: Balance Sheets as of December 31 2021 2020 $ 72,000 439,000 894,000 $ 1,405,000 238,000 132,000 61,000 $ 1,836,000 Cash Accounts receivable Inventories Total current assets Land and building Machinery Other fixed assets Total assets Accounts payable Accrued liabilities Notes payable Total current liabilities Long-term debt Common stock Retained earnings Total liabilities and equity $ 80,000 45,010 476,990 $ 602,000 399,688 575,000 259,312 $1,836,000 $ 65,000 328,000 813,000 $ 1,206,000 271,000 133,000 57,000 $ 1,667,000 $ 72,708 40,880 457,912 $ 571,500 258,898 575,000 261,602 $ 1,667,000