Accounting

Jessica Lee has been hired by J&J Industries to assist in financial planning and company performance evaluation. She graduated five years ago with a degree in finance and has been working in the finance department of a Fortune 500 company since then. J&J Industries was founded by friends Eric Johnson and Tyler Jameson ten years ago. The company has produced and sold light aircraft over this time and has received high safety and reliability ratings. The company has a niche market, selling primarily to individuals who own and fly their own aircraft. J&J Industries has two models: the Phoenix, priced at $53,000, and the Falcon, priced at S78,000. Although the company manufactures aircraft, its operations differ from commercial aircraft companies. J&J Industries builds aircraft to order and, by using prefabricated parts, can complete the manufacture of an aircraft in just five weeks. The company also receives a deposit and partial payment before the order is complete. In contrast, a commercial aircraft may take one and a half to two years to manufacture once an order is placed. Eric and Tyler have provided financial statements, and Jessica has gathered industry ratios for the light aircraft manufacturing industry. J&J Industries Income Statement December 31 ,2022 Sales Cost of goods sold Other expenses Depreciation EBIT Interest Taxable income Taxes (21%) Net income Dividends Additions to retained earnings Also the following balance sheet information is shared with you: Cash Accounts a ble Accounts receivable 21,758,220 3,483,370 952,300 528 170 s 2,429,700 510,237 s 297,660 s 530,037 s 1 039 168 2 228 356 2 IOO 173 1 798 302 s 5,570,000 s 210000 13,519,722 Notes able Invent Lon -term debt Net lantand ui Common stock Retained earnin s Current ratio uick ratio Cash ratio Total asset turnover Invent turnover Receivables turnover Total debt ratio Debt-e ui ratio ui multi lier Times Interest earned Cash covera e ratio Profit ma Return on assets Return on ui OUESTIONS ent Li htA lane Ind Lower e .50 .64 .08 .68 4.89 6.27 .31 .58 1.58 5.18 5.84 4.05% 6.05% 9.93% Ratios Median 1.43 .84 .21 .85 6.15 9.82 .52 I .08 2.08 8.06 8.43 6.75% 10.53% 16340/0 1.89 1.05 .39 1.13 10.89 11.51 .61 1.56 2.56 9.83 10.27 8.47% 13.21% 26.15% 2- 3- 4- Can you please calculate the ratios for J&J Air that are prevalent in the industry? Eric and Jameson agree that analyzing ratios can measure company performance. They selected Airbus as an aspirant. DO you agree? Why or why not? Compare J&J Air's performance to that of the industry. For every ratio, provide your comments on why it could be regarded as positive or negative when compared to the industry. If you were to create an inventory ratio that's calculated by dividing inventory by current liabilities, how do you think J&J Air's ratio would compare to the industry average? Calculate both the internal growth rate and sustainable growth rate for J&J Air and explain what these numbers mean.