31

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Using the information below calculate ROA and ROE for this company for 20X4.

Company A	20X6	20X5	20X4	20X3	20X2	Ind. Average
Net Profit Margin	4.5%	4.7%	4.7%	4.8%	5.0%	4.7%
Total Asset TO	5.5	5.8	5.9	6.5	7.0	6.0
Finl Leverage Ratio	1.4	1.4	1.4	1.5	1.5	1.5

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Question32

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A Company is trying to determine why their overall profit margin is low. Considering the information presented below, where within the multi-step income statement would you recommend that management look to potentially identify and solve the problem and what types of expense items could be a concern for this company?

Company B	20X6	20X5	20X4	20X3	20X2	Ind. Average
Gross Profit Margin	51.0%	51.0%	49.0%	50.0%	51.0%	50.0%
Oper Profit Margin	12.0%	12.0%	13.0%	12.0%	11.0%	12.0%
Net Profit Margin	3.0%	4.0%	4.0%	5.0%	5.0%	6.0%

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Question33

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General information applicable to Phoenix Company is provided below.

		20X4	20X3	20X2	20X1	20X0	Primary Competitor
Debt Ratio (Book-based)	72%	69%	66%	60%	58%	64%
TIE		6.5	6.0	4.9	5.8	7.2	7.0
Bond Rating (S&P)	BBB-	BB+	BB	BBB+	AA-	BBB+

What is indicated by Phoenix Company's bond ratings?Do you see anything positive and how does it compare to the primary competitor?

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Question34

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General information applicable to Phoenix Company is provided below.

		20X4	20X3	20X2	20X1	20X0	Ind. Average
Debt Ratio (Book-based)	72%	69%	66%	60%	58%	64%
TIE		6.5	6.0	4.9	5.8	7.2	7.0
Bond Rating (S&P)	BBB-	BB+	BB	BBB+	AA-	NA

What is indicated by this company's TIE? Give a general commentary on the pattern exhibited by the TIE and what it indicates regarding Phoenix's overall debt paying ability.

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Question35

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A few liquidityratios for Bravo Company are shown below. What do these liquidity ratios reveal to you about Bravo Company's liquidity position? Ifthey were available to you, what additional ratios would you like to review in order to get a clearer picture of the strength or weakness of the Bravo Company?
		2014	2013	2012	2011	2010	Ind. Average
	Current ratio	2.6	2.4	2.5	2.2	1.9	1.8
	Quick Ratio	0.9	0.8	1.0	0.9	1.0	0.9
	Cash Ratio	0.5	0.5	0.6	0.6	0.5	0.5

Question38

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General information applicable to Phoenix Company is provided below.

		20X4	20X3	20X2	20X1	20X0	Ind. Average
Debt Ratio (Book-based)	72%	69%	66%	60%	58%	64%
TIE		6.5	6.0	4.9	5.8	7.2	7.0
Bond Rating (S&P)	BBB-	BB+	BB	BBB+	AA-	NA

From the information given above, calculate the Financial Leverage Ratio (FLR) for Phoenix Company for the year 20X4.