2 Studen ID: Section No.: Formula Unit Result 3 Q1 4 Ratio 5 Current Ratio 6 Quick Ratio 7 Cash Ratio 8 Total Asset Turnover 9 Inventory Turnover 10 Receivables Turnover 11 Total Debt Ratio 12 Debt-Equity Ratio 13 Equity Multiplier 14 Times Interest Earned 15 Cash Coverage Ratio 16 Profit Margin 17 Return on Assets 18 Return on Equity 19 20 21 22 Q2 Point 1 1 1 1 1 1 1 1 1 1 1 1. 1 1 Point 1 1 1 1 1 1 1 Point 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 Total 14 14 14 42 point Solution Sheet READY o m ./r/ 10 20 21 22 Q2 23 24 25 26 27 28 29 Q3 point Refere Favorable! Ratio Result Point Short analysis Point Total A19 TU V W L K J M H G N O R S Reference for comparing the ratio to industry B A D E 29 Q3 Light Airplane Industry Ratios Favorable! Ratio Point Result Unfavorable Point Short analysis 30 Lower Quartile 0.50 Upper Median Quartile 1.43 1.89 1 1 1 1 1 Current Ratio 31 32 Quick Ratio 33 Cash Ratio 34 Total Asset Turnover 35 Inventory Turnover 38 Receivables Turnover ---- Current Ratio Quick Ratio Cash Ratio Total Asset Turnover Inventory Turnover 0.84 0.08 0.88 4.89 0.84 0.21 0.85 8.15 1.05 0.39 1.28 10.89 2 6.27 9.82 11.51 1 0.81 2 1 Total Debt Ratio 37 38 Debt-Equity Ratio 39 Equity Multiplier 40 Times Interest Eamed 41 Cash Coverage Ratio 22 Profit Margin Return on Assets Receivables Turnovel Total Debt Ratio Debt-Equity Ratio Equity Multiplier Times Interest Earne Cash Coverage Ratio 0.31 0.58 1.58 5.18 0.52 1.08 2.08 8.08 8.43 1 1 1 1 1.58 2.58 9.83 10.27 5.84 4.05%6 5.15% 6.47% Profit Margin 1 6.05% 10.5396 13.21% 1 Return on Assets Return on Equity 9.93% 16.54% Return on Equity 44 28.15% 9 23 point 14 Total 47 Deeper analysis on current and quick ratio 6 points 29 50 51 52 59 54 Solution Sheet READY Sulli Return 1 Retum on Equity Return 9 123 point 14 Total 45 28 47 Deeper analysis on current and quick ratio: 28 8 points 51 52 58 57 58 Overall interpretation 59 83 4 point 10 points 22 84 4 Formula Calculation Point 4 Retention Patio 4 4 87 Internal Growth es Sustainable Growth Overall Interpretation 70 3 73 74 15 points Total Solution Sheet READY Ratios and Financial Planning at S&S Air, Inc. CO Chris Guthrie was recently hired by S&S Air, Inc., to assist the company with its financial planning and to evaluate the company's performance. Chris graduated from college five years ago with a finance degree. He has been employed in the finance department of a Fortune 500 company since then. S&S Air was founded 10 years ago by friends Mark Sexton and Todd Story. The company has manufactured and sold light airplanes over this period, and the company's products have received high reviews for safety and reliability. The company has a niche market in that it sells primarily to individuals who own and fly their own airplanes. The company has two models: the Birdie, which sells for $53,000, and the Eagle, which sells for $78,000. While the company manufactures aircraft. Its operations are different from commercial aircraft companies. S&S Alr bullds aircraft to order. By using prefabricated parts, the company is able to complete the manufacture of an airplane in only five weeks. The company also receives a deposit on each order, as well as another partial payment before the order is complete In contrast, a commercial airplane may take one and one-half to two years to manufacture once the order is placed Mark and Todd have provided the following financial statements. Chris has gathered the industry ratios for the light airplane manufacturing industry. n S&S AIR, INC. 2019 Income Statement Sales $26.501,600 Cost of goods sold 19,780,200 Other expenses 3.166.700 864.500 Depreciation $ 2,690,200 EBIT 429.200 Interest $ 2.211,000 Taxable income 464.310 Taxes (21%) S 1.746.690 Net income $270.600 Dividends 1. 176,090 Additions to retained earnings sas AIR, INC 2019 Balance Sheet Assets Liabilities and Equity Current assets Current liabilities Cash $ 481,852 $ 944,698 Accounts payable Notes payable Accounts receivable 2,025.778 1.909 248 Inventory 1,634,820 Total current liabilities $ 2,853.946 Total current assets $ 4.142,450 Fixed assets Long-term debt $ 5,060,000 Net plant and equipment $16.256.698 Shareholder equity Common stock $ 190,000 Retained earnings 12,295,202 Assets Liabilities and Equity Current assets Current liabilities Cash $ 481,852 Accounts payable $ 944.698 Accounts receivable 2,025.778 Notes payable 1.909.248 Inventory 1.634.820 Total current liabilities $ 2.853.946 Total current assets $ 4.142.150 Fixed assets Long-term debt $ 5.060.000 $16,256,698 Net plant and equipment Shareholder equity S Common stock 190,000 Retained earnings 12.295,202 Total equity $12.485.200 Total liabilities and equity $20 399.148 $20,399.148 Total assets Light Airplane Industry Ratios Lower Quartile Median Upper Quartile Current ratio -50 1.43 1.89 Quick ratio Cash ratio .64 .84 1.05 .08 .21 -39 Total asset turnover .68 185 1.13 Inventory turnover Receivables turnover 4.89 6.15 10.89 6.27 9.82 11.51 Total debt ratio 431 -52 -61 58 1.08 1.56 1.68 2.08 2.56 9.83 5.18 8.06 Debt-equity ratio Equity multiplier Times interest earned Cash coverage ratio Profit margin Return on assets Return on equity 5.84 10.2017 4.05% 8.47% 8.43 6.75% % 10.53% 16.67% 6.05% 13.21% 9.98% 26.15%