4-11. (Financial analysis) The T. P. Jarmon Company manufactures and sells a line of exclusive sportswear. The firms sales were $600,000 for the year just ended, and its total assets exceeded $400,000. The company was started by Mr. Jarmon just 10 years ago and has been profitable every year since its inception. The chief financial officer for the firm, Brent Vehlim, has decided to seek a line of credit totaling $80,000 from the firms bank. In the past, the company has relied on its suppliers to finance a large part of its needs for inventory. However, in recent months tight money conditions have led the firms suppliers to offer sizable cash discounts to speed up payments for purchases. Mr. Vehlim wants to use the line of credit to replace a large portion of the firms payables during the summer, which is the firms peak seasonal sales period. The firms two most recent balance sheets were presented to the bank in support

Foundations of Finance eth FdX E FIN 801 Syllabus Fal 2016.pdf + O File C:/Users/safiy/Documents/FINANCE/Foundations-of-Finance-Ath-Edition.xlf 18 Not syncing 3) Contents 163 of 549 Q Highlight Erase e 1.200 + L Page view | A Read aloud A* Read aloud Draw T. P.Jarman Company, Balance Sheet for 12/21/2012 and 12/31/2013 2012 2013 Cash $ 15,000 $14.000 Marketable securities 6,000 6.200 Accounts receivable 42.000 33.000 Inventory 51.000 84,000 Prepaid rent 1.100 Total current assets $115,200 5138,300 Net plant and equipment 286,000 270.000 Total assets S401200 5408,300 Accounts payable $4,000 S 57.000 Notes payable 15,000 13.000 Accruals G DOO 5.000 Total current abilities $ 69,000 $ 75,000 Long term det 160.000 150.000 Common stockholders equity 172200 183.300 Total liabilities and equity $401,200 5408,300 T.P.Jarman Company, Income Statement for the Year Ended 12/31/2013 Sales (all credit 5600.000 Less cost of goods sold 460,000 Gross profit $ 140,000 Less operating and interest expenses General and administrative 530,000 Interest 10,000 Depreciation 30,000 Total 70,000 Earnings before takes $ 70,000 Less taxes 27.100 Net income available to common stockholders $42.900 Less cash dividends 31.00 Change in retained earnings $ 11,100 Jan Fama, associate credit analyst for the Merchants National Bank of Midland, Lichigan, was assigned the task of analyzing Jarmson's kan request, a. Calculate the financial rates for 2013 corresponding us the industry Dorms provided as follows RATIO NORM M Type here to search OBH (2 90F A D 11:34 AM 9/6/2021 Foundations of Finance 8th Fix E FIN 201 Syllabus fal 2016.pdf | + G O File C:/Users/safiy/Documents/FINANCE/Foundations-of-Finance-Ath-Edition.pdf to Not syncing 3 e Contents 163 of 549 Q EL L Page view | A Read aloud A Read aloud IV Draw Highlight Erase Less cash dividends Change in retained earnings 31,800 $ 11.100 Jan Fama, associate credit analyse for the Merchant Natal Bank of Midlar, Michigan, was assigned the task of analyzing Jarmon's loan request. 1. Calculate the financial ratio for 2013 corresponding to the industry moms pewided as follows RATIO NORM Current ratio 18 Acid-test ratio 0.9 Debt ratio 05 times interest named 10.0 Average collection period 20.0 inventary turnover based on cost of goods sold 7.0 Heturn on common equity 12.04 Operating retum on assets 16.84 Operating profit margin 14.09 Total asset turnover 1.20 Fixed asset tumover 1.800 Chapter 4. Evaluating a Firm's Financial Performance 137 Which of the ratices reported in the industry w do you feel slecnicial in determining whether the bank sbull extend the line of credit c. Prepare Jarmon's statement of cash flows for the year ended December 31, 2013. Interprer your findings d. if you provided by the financial ratios and the cash flow statement to decide if you would support making the ban 4-12. (Fawwwwww Med Stegmalier Inc.'s managers want to crluate the firu's prior-year performance in urms of its cuatribution to shareholder value. This past year, the firm carmed an operating return on investment of 12 percent, compared to an industry norm of 11 percent. Ilsas been estimated that the firm's investors have an opportunity cost on their hands of 14 percent, which is the same as its owcrallax efcapital. The fin's total assets for the year were 100 million, Compute the amount of comic value created or destroyed by the firm. How does your mil- ing support or fail to support what om would conclude using ratio analysis to evaluate the firm's M HE Type here to search 90F AB 11:35 AM 9/6/2021 20 Foundations of Finance eth FdX E FIN 801 Syllabus Fal 2016.pdf + O File C:/Users/safiy/Documents/FINANCE/Foundations-of-Finance-Ath-Edition.xlf 18 Not syncing 3) Contents 163 of 549 Q Highlight Erase e 1.200 + L Page view | A Read aloud A* Read aloud Draw T. P.Jarman Company, Balance Sheet for 12/21/2012 and 12/31/2013 2012 2013 Cash $ 15,000 $14.000 Marketable securities 6,000 6.200 Accounts receivable 42.000 33.000 Inventory 51.000 84,000 Prepaid rent 1.100 Total current assets $115,200 5138,300 Net plant and equipment 286,000 270.000 Total assets S401200 5408,300 Accounts payable $4,000 S 57.000 Notes payable 15,000 13.000 Accruals G DOO 5.000 Total current abilities $ 69,000 $ 75,000 Long term det 160.000 150.000 Common stockholders equity 172200 183.300 Total liabilities and equity $401,200 5408,300 T.P.Jarman Company, Income Statement for the Year Ended 12/31/2013 Sales (all credit 5600.000 Less cost of goods sold 460,000 Gross profit $ 140,000 Less operating and interest expenses General and administrative 530,000 Interest 10,000 Depreciation 30,000 Total 70,000 Earnings before takes $ 70,000 Less taxes 27.100 Net income available to common stockholders $42.900 Less cash dividends 31.00 Change in retained earnings $ 11,100 Jan Fama, associate credit analyst for the Merchants National Bank of Midland, Lichigan, was assigned the task of analyzing Jarmson's kan request, a. Calculate the financial rates for 2013 corresponding us the industry Dorms provided as follows RATIO NORM M Type here to search OBH (2 90F A D 11:34 AM 9/6/2021 Foundations of Finance 8th Fix E FIN 201 Syllabus fal 2016.pdf | + G O File C:/Users/safiy/Documents/FINANCE/Foundations-of-Finance-Ath-Edition.pdf to Not syncing 3 e Contents 163 of 549 Q EL L Page view | A Read aloud A Read aloud IV Draw Highlight Erase Less cash dividends Change in retained earnings 31,800 $ 11.100 Jan Fama, associate credit analyse for the Merchant Natal Bank of Midlar, Michigan, was assigned the task of analyzing Jarmon's loan request. 1. Calculate the financial ratio for 2013 corresponding to the industry moms pewided as follows RATIO NORM Current ratio 18 Acid-test ratio 0.9 Debt ratio 05 times interest named 10.0 Average collection period 20.0 inventary turnover based on cost of goods sold 7.0 Heturn on common equity 12.04 Operating retum on assets 16.84 Operating profit margin 14.09 Total asset turnover 1.20 Fixed asset tumover 1.800 Chapter 4. Evaluating a Firm's Financial Performance 137 Which of the ratices reported in the industry w do you feel slecnicial in determining whether the bank sbull extend the line of credit c. Prepare Jarmon's statement of cash flows for the year ended December 31, 2013. Interprer your findings d. if you provided by the financial ratios and the cash flow statement to decide if you would support making the ban 4-12. (Fawwwwww Med Stegmalier Inc.'s managers want to crluate the firu's prior-year performance in urms of its cuatribution to shareholder value. This past year, the firm carmed an operating return on investment of 12 percent, compared to an industry norm of 11 percent. Ilsas been estimated that the firm's investors have an opportunity cost on their hands of 14 percent, which is the same as its owcrallax efcapital. The fin's total assets for the year were 100 million, Compute the amount of comic value created or destroyed by the firm. How does your mil- ing support or fail to support what om would conclude using ratio analysis to evaluate the firm's M HE Type here to search 90F AB 11:35 AM 9/6/2021 20