7. 7: Analysis of Financial Statements: Tying the Ratios Together ratios. Management can use the DuPont equation to analyze The DuPont equation shows the relationships among asset management, debt management, and let ways of improving the firm's performance. Its equation is: ROE Profit marginx Total assets turnover x Equity multiplier Ratio analysis is important to understand and interpret financial statements; however, sound financial analysis involves more than just calculating and interpreting numbers. factors also need to be considered. Select Quantitative Problem: Rosnan Industries 2019 and 2018 balance sheets and income statements are shown below. Balance Sheets: 2018 2019 $70 Cash and equivalents $55 275 300 Accounts receivable Inventories 375 350 $720 1705 Total current assets Net plant and equipment 2,000 1,490 Total assets $2,720 $2,195 Accounts payable $150 S 115 Accruals 75 50 Notes payable 120 145 Total current liabilities. $345 $ 280 Long-term debt 450 290 Common stock 1,225 Retained earnings 700 de Total liabilities and equity $2,720 1,225 400 Ch 04: Blueprint Problems Analysis of Financial Statements Accruals 75 50 Notes payable 120 145 Total current kabilities $ 345 $ 280 Long-term debt 450 290 Common stock 1,225 1,225 MIDD Retained earnings 700 400 Total liabilities and equity $2,720 $2,195 2019 2018 Sales $1,885 $1,425 Operating costs excluding depreciation 1,250 1,000 EBITDA $ 425 Depreciation and amortization $635 100. $535 EBIT 75 $350 46 Interest 63 EST $ 472 $ 304 Taxes (25%) 118 76 Net income $ 354 $ 228 Dividends paid $ 54 $ 48 Addition to retained earnings $300 $180 Shares outstanding 100 100 $25.00 $22.50 Price WACC 10.00% What is the firm's 2019 current ratio? Round your answer to two decimal places. current assets to meet its current obligations as they come due The 2019 current ratio indicates that Rosnan has a What is the firm's 2019 total assets turnover ratio? Round your answer to four decimal places. Given the 2019 current and total assets turnover ratios calculated above, if Rosnan's 2019 quick ratio is 1.0 then an analyst might conclude that Rosnan's fixed assets are Income Statements: C A A- >> What is the firm's 2019 current ratio? Round your answer to two decimal places. The 2019 current ratio indicates that Rosnan has current assets to meet its current obligations as they come due. What is the firm's 2019 total assets turnover ratio? Round your answer to four decimal places. Given the 2019 current and total assets turnover ratios calculated above, If Rosnan's 2019 quick ratio is 1.0 then an analyst might conclude that Rosnan's fixed assets are managed What is the firm's 2019 debt-to-capital ratio? Round your answer to two decimal places. If the industry average debt-to-capital ratio is 30%, then Rosnan's creditors have a cushion than indicated by the industry average. What is the firm's 2019 profit margin? Round your answer to two decimal places. If the industry average profit margin is 12%, then Rosnan's lower than average debt-to-capital ratio might be one reason for its high profit margin What is the firm's 2019 price/earnings ratio? Round your answer to two decimal places. Using the DuPont equation, what is the firm's 2019 ROE? Round your answer to two decimal places. Grade It Now Save & Continue A-Z JONE 7. 7: Analysis of Financial Statements: Tying the Ratios Together ratios. Management can use the DuPont equation to analyze The DuPont equation shows the relationships among asset management, debt management, and let ways of improving the firm's performance. Its equation is: ROE Profit marginx Total assets turnover x Equity multiplier Ratio analysis is important to understand and interpret financial statements; however, sound financial analysis involves more than just calculating and interpreting numbers. factors also need to be considered. Select Quantitative Problem: Rosnan Industries 2019 and 2018 balance sheets and income statements are shown below. Balance Sheets: 2018 2019 $70 Cash and equivalents $55 275 300 Accounts receivable Inventories 375 350 $720 1705 Total current assets Net plant and equipment 2,000 1,490 Total assets $2,720 $2,195 Accounts payable $150 S 115 Accruals 75 50 Notes payable 120 145 Total current liabilities. $345 $ 280 Long-term debt 450 290 Common stock 1,225 Retained earnings 700 de Total liabilities and equity $2,720 1,225 400 Ch 04: Blueprint Problems Analysis of Financial Statements Accruals 75 50 Notes payable 120 145 Total current kabilities $ 345 $ 280 Long-term debt 450 290 Common stock 1,225 1,225 MIDD Retained earnings 700 400 Total liabilities and equity $2,720 $2,195 2019 2018 Sales $1,885 $1,425 Operating costs excluding depreciation 1,250 1,000 EBITDA $ 425 Depreciation and amortization $635 100. $535 EBIT 75 $350 46 Interest 63 EST $ 472 $ 304 Taxes (25%) 118 76 Net income $ 354 $ 228 Dividends paid $ 54 $ 48 Addition to retained earnings $300 $180 Shares outstanding 100 100 $25.00 $22.50 Price WACC 10.00% What is the firm's 2019 current ratio? Round your answer to two decimal places. current assets to meet its current obligations as they come due The 2019 current ratio indicates that Rosnan has a What is the firm's 2019 total assets turnover ratio? Round your answer to four decimal places. Given the 2019 current and total assets turnover ratios calculated above, if Rosnan's 2019 quick ratio is 1.0 then an analyst might conclude that Rosnan's fixed assets are Income Statements: C A A- >> What is the firm's 2019 current ratio? Round your answer to two decimal places. The 2019 current ratio indicates that Rosnan has current assets to meet its current obligations as they come due. What is the firm's 2019 total assets turnover ratio? Round your answer to four decimal places. Given the 2019 current and total assets turnover ratios calculated above, If Rosnan's 2019 quick ratio is 1.0 then an analyst might conclude that Rosnan's fixed assets are managed What is the firm's 2019 debt-to-capital ratio? Round your answer to two decimal places. If the industry average debt-to-capital ratio is 30%, then Rosnan's creditors have a cushion than indicated by the industry average. What is the firm's 2019 profit margin? Round your answer to two decimal places. If the industry average profit margin is 12%, then Rosnan's lower than average debt-to-capital ratio might be one reason for its high profit margin What is the firm's 2019 price/earnings ratio? Round your answer to two decimal places. Using the DuPont equation, what is the firm's 2019 ROE? Round your answer to two decimal places. Grade It Now Save & Continue A-Z JONE