(15 marks) Question 2 The financial information for Roger Inc. is given below: Industry Average 20x 13x 350 days Ratio Current Quick Days sales outstanding Inventory turnover Total assets turnover Profit margin ROA ROE Total debt/total assets "Calculation is based on a 365 day year. 12 36% 90% 60.0% Balance Sheet as of December 31, 2008 (In Thousands) Cash 5 77,500 Accounts payable $129,000 Receivables 336,000 Notes payable 84,000 Inventories 241,500 Other current liabilities 117000 Total current assets 5655,000 Total current liabilities 5330,000 Long term debt 256.500 Net fixed assets 292.500 Common equity 361.000 Total assets 5947.500 Total liabilities and equity 5947.500 Income Statement for Year Ended December 31, 2008 (In Thousands) Sales $1,607,500 Cost of goods sold Materials $ 717.000 Labor 453,000 Heat, light, and power 68,000 Indirect labor 113,000 Depreciation 41,500 1,392.500 Gross profit $ 215,000 Selling expenses 115,000 General and administrative expenses 30,000 Earnings before interest and taxes (EBIT) $ 70,000 Interest expense 24.500 Earnings before taxes (EBT) $ 45,500 Federal and state income taxes (40%) 18.200 Net income 27.300 11 + a. Calculate the debt management and asset management ratios for Roger Inc. b. Outline Roger's strengths and weaknesses as revealed by your analysis. You only have to focus on debt management and siket til management areas of business performance. c. Calculate ROE using du-pont equation for the firm and Industry (make table). Conduct Du-pont analysis by comparing the to ROE of firm with the industry. (15 marks) Question 2 The financial information for Roger Inc. is given below: Industry Average 20x 13x 350 days Ratio Current Quick Days sales outstanding Inventory turnover Total assets turnover Profit margin ROA ROE Total debt/total assets "Calculation is based on a 365 day year. 12 36% 90% 60.0% Balance Sheet as of December 31, 2008 (In Thousands) Cash 5 77,500 Accounts payable $129,000 Receivables 336,000 Notes payable 84,000 Inventories 241,500 Other current liabilities 117000 Total current assets 5655,000 Total current liabilities 5330,000 Long term debt 256.500 Net fixed assets 292.500 Common equity 361.000 Total assets 5947.500 Total liabilities and equity 5947.500 Income Statement for Year Ended December 31, 2008 (In Thousands) Sales $1,607,500 Cost of goods sold Materials $ 717.000 Labor 453,000 Heat, light, and power 68,000 Indirect labor 113,000 Depreciation 41,500 1,392.500 Gross profit $ 215,000 Selling expenses 115,000 General and administrative expenses 30,000 Earnings before interest and taxes (EBIT) $ 70,000 Interest expense 24.500 Earnings before taxes (EBT) $ 45,500 Federal and state income taxes (40%) 18.200 Net income 27.300 11 + a. Calculate the debt management and asset management ratios for Roger Inc. b. Outline Roger's strengths and weaknesses as revealed by your analysis. You only have to focus on debt management and siket til management areas of business performance. c. Calculate ROE using du-pont equation for the firm and Industry (make table). Conduct Du-pont analysis by comparing the to ROE of firm with the industry