7. 7: Analysis of Financial Statements: Tying the Ratios Together The DuPont equation shows the relationships among asset management, debt management, and - Select ratios. Management can use the DuPont equation to analyze ways of improving the firm's performance. Its equation is: ROE - Profit margin x Total assets turnover x Equity multiplier N Ratio analysis is important to understand and interpret financial statements; however, sound financial analysis involves more than just calculating and interpreting numbers. Qualitative factors also need to be considered. Quantitative Problem: Rosnan Industries' 2019 and 2018 balance sheets and income statements are shown below. Balance Sheets: 2019 2018 Cash and equivalents $ 100 85 Accounts receivable 275 300 Inventories 375 350 Total current assets $ 750 $ 735 Net plant and equipment 2,000 1,490 Total assets $2,750 $2,225 $ 85 $ 150 75 50 150 175 $ 375 310 Accounts payable Accruals Notes payable Total current liabilities Long-term debt Common stock Retained earnings Total liabilities and equity Income Statements: 450 290 1,225 700 1,225 400 $2,750 $2,225 2019 2018 Sales $1,885 1,250 $1,425 1,000 $ 425 $ 635 100 75 $ 535 Operating costs excluding depreciation EBITDA Depreciation and amortization EBIT Interest EBT Taxes (25%) Net income $ 350 46 63 $ 304 $ 472 118 76 $ 354 $ 228 $ 54 $ 48 Dividends paid Addition to retained earnings $ 300 $ 180 100 Shares outstanding Price 100 $22.50 $25.00 Price WACC $25.00 $22.50 10.00 % What is the firm's 2019 current ratio? Round your answer to two decimal places. The 2019 current ratio indicates that Rosnan has - Select 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 Select What is the firm's 2019 debt-to-capital ratio? Round your answer to two decimal places. 96 If the industry average debt-to-capital ratio is 30%, then Rosnan's creditors have a -Select 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. -Select- What is the firm's 2019 price/earnings ratio? Round your answer to two decimal places. Given the 2019 current and total assets turnover ratlos calculated above, If Rosnan's 2019 quick ratio is 1.0 then an analyst might conclude that Rosnan's fixed assets are managed Select 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 -Select- v 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. -Select 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. % ch 04: Blueprint Problems - Analysis of Financial Statements Back to Assignment Attempts: Keep the Highest: /12 7. 7: Analysis of Financial Statements: Tying the Ratios Together The DuPont equation shows the relationships among asset management, debt management, an -Select ratios. Management can use the Du liquidity equation to analyze ways of improving the firm's performance. Its equation is: ROE = Profit margin x Total assets turnover x Equity multiplier market profitability Ratio analysis is important to understand and interpret financial statements; however, sound financial analysis involves more than just calculating and interpreting numbers. -Select factors also need to be considered. Quantitative Problem: Rosnan Industries' 2019 and 2018 balance sheets and income statements are shown below. Balance Sheets: 2019 2018 Cash and equivalents $ 100 85 Accounts receivable 275 300 Inventories 375 350 Total current assets $ 750 $ 735 Net plant and equipment 2,000 1,490 Total assets $2,750 $2,225 $ leads.csv salesforce_lab....docx Sho to Assignment empts: Keep the Highest: / 12 7: Analysis of Financial Statements: Tying the Ratios Together he DuPont equation shows the relationships among asset management, debt management, a Equation to analyze ways of improving the firm's performance. Its equation is: ROE = Profit margin Total assets turnover x Equ Ratio analysis is important to understand and interpret financial statements; however, sound finan interpreting numbers -Select factors also need to be considered. Quantitative Quantitative Proble Qualitative istries' 2019 and 2018 balance sheets and income statements Foreign Balance Sheets: 2019 2018 Cash and equivalents 100 $ 85 Accounts receivable 275 300. Inventories 375 350 Total current assets $ 750 735 Net plant and equipment 2,000 1,490 Total assets $2,750 $2,225