8. Table 3.1 in Chapter 3 @ presents financial statements over the period 2014 through 2017 for R&E Supplies, Inc. a. Use these statements to calculate as many of the ratios in Table 2.2 as you can. b. What insights do these ratios provide about R&E's financial performance? What problems, if any, does the company appear to have? TABLE 3.1 Financial Statements for R&E Supplies, Inc., December 31, 2014-2017 ($ thousands) Income Statements 2014 $11,190 9,400 1,790 2015 $13,764 11,699 2,065 2016 $16,104 13,688 2,416 2017* $20,613 17,727 2,886 Net sales Cost of goods sold Gross profit Expenses: General, selling, and administrative expenses Net interest expense Earnings before tax 2,267 90 1,019 100 671 302 $ 369 Balance Sheets 1,239 103 723 325 398 1,610 110 696 313 383 529 Tax 238 291 Earnings after tax $ $ $ $ $ 551 1,789 1,376 $ 671 1,343 1,119 14 3,147 128 $ 3,275 $ 644 2,094 1,932 15 412 2,886 2,267 18 12 4,685 Assets Current assets: Cash and securities Accounts receivable Inventories Prepaid expenses Total current assets Net fixed assets Total assets Liabilities and Owners' Equity Current liabilities: Bank loan Accounts payable Current portion long-term debt Accrued wages 5,583 3,728 124 $3,852 295 $ 4,980 287 $ 5,870 $ $ $ 50 1,007 50 1,443 $ 50 2,426 50 3,212 50 50 100 7 10 18 Accrued wages Total current liabilities Long-term debt Common stock Retained earnings Total liabilities and owners' equity 1,122 960 150 1,043 $ 3,275 1,550 910 150 1,242 $ 3,852 10 2,536 860 150 1,434 $ 4,980 18 3,380 760 150 1,580 $ 5,870 TABLE 2.2 Ratio Analysis of Hasbro Inc., 2012-2016, and Industry Averages, 2016 Industry Average* 2012 2013 2014 2015 2016 22.3 28.4 29.6 17.0 6.5 9.2 10.8 7.8 12.9 11.7 27.2 9.6 15.5 10.2 55.3 18.6 17.5 11.0 14.0 6.4 10.6 11.5 53.8 29.9 14.9 9.7 54.5 16.5 8.2 53.2 7.0 53.9 25.2 55.6 13.8 17.9 0.9 0.9 17.7 0.9 18.0 17.3 5.4 97.8 6.1 1.0 18.8 5.8 96.0 5.7 Profitability ratios: Return on equity (%) Return on assets (%) Return on invested capital (%) Profit margin (%) Gross margin (%) Price-to-earnings ratio (X) Turnover-control ratios: Asset turnover (X) Fixed-asset turnover (X) Inventory turnover (X) Collection period (days) Days' sales in cash (days) Payables period (days) Leverage and liquidity ratios: Assets to equity (X) Debt to assets (%) Debt to equity (%) Times interest earned (X) Times burden covered (X) Debt to assets (market value, %) Debt to equity (market value, %) Current ratio (X) Acid test (X) 0.9 18.7 5.2 99.9 80.2 44.3 0.7 13.3 14.0 60.0 108.3 58.6 91.9 75.8 26.7 61.0 93.4 76.2 39.8 93.2 38.5 52.4 2.9 2.6 2.3 2.7 63.4 61.8 161.7 3.1 67.7 209.2 6.8 1.0 65.2 186.9 6.0 1.6 2.8 64.8 183.7 7.3 173.3 50.8 128.5 13.5 4.9 - 8.3 1.2 1.6 2.9 37.8 30.9 2.6 25.0 33.3 2.0 27.4 37.7 1.8 1.6 34.6 92.8 60.9 26.7 36.4 2.7 44.8 2.5 2.2 2.6 2.3 2.3 1.8 2.8 8. Table 3.1 in Chapter 3 @ presents financial statements over the period 2014 through 2017 for R&E Supplies, Inc. a. Use these statements to calculate as many of the ratios in Table 2.2 as you can. b. What insights do these ratios provide about R&E's financial performance? What problems, if any, does the company appear to have? TABLE 3.1 Financial Statements for R&E Supplies, Inc., December 31, 2014-2017 ($ thousands) Income Statements 2014 $11,190 9,400 1,790 2015 $13,764 11,699 2,065 2016 $16,104 13,688 2,416 2017* $20,613 17,727 2,886 Net sales Cost of goods sold Gross profit Expenses: General, selling, and administrative expenses Net interest expense Earnings before tax 2,267 90 1,019 100 671 302 $ 369 Balance Sheets 1,239 103 723 325 398 1,610 110 696 313 383 529 Tax 238 291 Earnings after tax $ $ $ $ $ 551 1,789 1,376 $ 671 1,343 1,119 14 3,147 128 $ 3,275 $ 644 2,094 1,932 15 412 2,886 2,267 18 12 4,685 Assets Current assets: Cash and securities Accounts receivable Inventories Prepaid expenses Total current assets Net fixed assets Total assets Liabilities and Owners' Equity Current liabilities: Bank loan Accounts payable Current portion long-term debt Accrued wages 5,583 3,728 124 $3,852 295 $ 4,980 287 $ 5,870 $ $ $ 50 1,007 50 1,443 $ 50 2,426 50 3,212 50 50 100 7 10 18 Accrued wages Total current liabilities Long-term debt Common stock Retained earnings Total liabilities and owners' equity 1,122 960 150 1,043 $ 3,275 1,550 910 150 1,242 $ 3,852 10 2,536 860 150 1,434 $ 4,980 18 3,380 760 150 1,580 $ 5,870 TABLE 2.2 Ratio Analysis of Hasbro Inc., 2012-2016, and Industry Averages, 2016 Industry Average* 2012 2013 2014 2015 2016 22.3 28.4 29.6 17.0 6.5 9.2 10.8 7.8 12.9 11.7 27.2 9.6 15.5 10.2 55.3 18.6 17.5 11.0 14.0 6.4 10.6 11.5 53.8 29.9 14.9 9.7 54.5 16.5 8.2 53.2 7.0 53.9 25.2 55.6 13.8 17.9 0.9 0.9 17.7 0.9 18.0 17.3 5.4 97.8 6.1 1.0 18.8 5.8 96.0 5.7 Profitability ratios: Return on equity (%) Return on assets (%) Return on invested capital (%) Profit margin (%) Gross margin (%) Price-to-earnings ratio (X) Turnover-control ratios: Asset turnover (X) Fixed-asset turnover (X) Inventory turnover (X) Collection period (days) Days' sales in cash (days) Payables period (days) Leverage and liquidity ratios: Assets to equity (X) Debt to assets (%) Debt to equity (%) Times interest earned (X) Times burden covered (X) Debt to assets (market value, %) Debt to equity (market value, %) Current ratio (X) Acid test (X) 0.9 18.7 5.2 99.9 80.2 44.3 0.7 13.3 14.0 60.0 108.3 58.6 91.9 75.8 26.7 61.0 93.4 76.2 39.8 93.2 38.5 52.4 2.9 2.6 2.3 2.7 63.4 61.8 161.7 3.1 67.7 209.2 6.8 1.0 65.2 186.9 6.0 1.6 2.8 64.8 183.7 7.3 173.3 50.8 128.5 13.5 4.9 - 8.3 1.2 1.6 2.9 37.8 30.9 2.6 25.0 33.3 2.0 27.4 37.7 1.8 1.6 34.6 92.8 60.9 26.7 36.4 2.7 44.8 2.5 2.2 2.6 2.3 2.3 1.8 2.8