2. You have been hired as an analyst for MB Bank Inc and your team is working on an independent assessment of DDF Ltd, a firm that specializes in the production of freshly imported farm products from South Africa. Your assistant has provided you with the following data for DDF Ltd and their industry. 2019 Ratio 2019 2018 2017 Industry Average Long-term debt 0.450.400.35 0.35 Inventory Turnover 62.65|42.42|32.25 53.25 Depreciation/Total Assets 0.25 0.014 0.018 0.015 Days' sales in receivables 113 98 94 130.25 Debt to Equity 0.75 0.85 0.90 0.88 Profit Margin 0.082 0.07 0.06 0.075 Total Asset Turnover 0.540.650.70 0.40 Quick Ratio 1.028 1.031.029 1.031 Current Ratio 1.331.211.15 1.25 Times Interest Eamed 0.9 4.375| 4.45 4.65 Equity Multiplier 1.75 1.85 1.90 1.88 Required: a. In the annual report to the shareholders, the CEO of DDF Ltd wrote, 2019 was a good year for the firm with respect to our ability to meet our short-term obligations. We had higher liquidity largely due to an increase in highly liquid current assets (cash, account receivables and short-term marketable securities). Is the CEO correct? Explain and use only relevant information in your analysis. b. What can you say about the firm's asset management? Be as complete as possible given the above information, but do not use any irrelevant information. c. You are asked to provide the shareholders with an assessment of the firm's solvency and leverage. Be as complete as possible given the above information, but do not use any irrelevant information. 2. You have been hired as an analyst for MB Bank Inc and your team is working on an independent assessment of DDF Ltd, a firm that specializes in the production of freshly imported farm products from South Africa. Your assistant has provided you with the following data for DDF Ltd and their industry. 2019 Ratio 2019 2018 2017 Industry Average Long-term debt 0.450.400.35 0.35 Inventory Turnover 62.65|42.42|32.25 53.25 Depreciation/Total Assets 0.25 0.014 0.018 0.015 Days' sales in receivables 113 98 94 130.25 Debt to Equity 0.75 0.85 0.90 0.88 Profit Margin 0.082 0.07 0.06 0.075 Total Asset Turnover 0.540.650.70 0.40 Quick Ratio 1.028 1.031.029 1.031 Current Ratio 1.331.211.15 1.25 Times Interest Eamed 0.9 4.375| 4.45 4.65 Equity Multiplier 1.75 1.85 1.90 1.88 Required: a. In the annual report to the shareholders, the CEO of DDF Ltd wrote, 2019 was a good year for the firm with respect to our ability to meet our short-term obligations. We had higher liquidity largely due to an increase in highly liquid current assets (cash, account receivables and short-term marketable securities). Is the CEO correct? Explain and use only relevant information in your analysis. b. What can you say about the firm's asset management? Be as complete as possible given the above information, but do not use any irrelevant information. c. You are asked to provide the shareholders with an assessment of the firm's solvency and leverage. Be as complete as possible given the above information, but do not use any irrelevant information
