Assessing Martin Manufacturings Current Financial Position

Terri Spiro, an experienced budget analyst at Martin Manufacturing Company, has been charged with assessing the firms financial performance during 2012 and its financial position at year-end 2012. To complete this assignment, she gathered the firms 2012 financial statements (see below). In addition, Terri obtained the firms ratio values for 2010 and 2011, along with the 2012 industry average ratios (also applicable to 2010 and 2011). These are presented in the table on historical and industry average ratios below.

Common Stock (1,000 shares @ $4.00 par) ( see a below)						$400,000	$400,000
Paid in capital in excess of par value						$593,750	$593,750
Retained Earnings						$300,000	$280,000
Total Stockholders Equity						$1,343,750	$1,323,750
Total Liabilities and Stockholders Equity						$3,125,000	$2,895,152
(a) The firms 100,000 outstanding shares of common stock closed 2012 at a price of $11.38 per share.

a. Calculate the firms 2012 financial ratios, and then fill in the preceding table. (Assume a 365-day year.)

b. Analyze the firms current financial position from both a cross-sectional and a time-series viewpoint. Break your analysis into evaluations of the firms liquidity, activity, debt, profitability, and market.

c. Summarize the firms overall financial position on the basis of your findings in part b.