Question
Based upon the financial information provided below for Addison Service Company, please answer all of the questions that follow. Please explain (show your work) exactly
Based upon the financial information provided below for Addison Service Company, please answer all of the questions that follow. Please explain (show your work) exactly how you arrived at your answers to all of the questions.
The financial statements of Addison Service Company are given below:
Addison Service Company |
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Income Statement (2015) |
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Sales | $8,000,000 |
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Cost of goods sold | 5,260,000 |
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Gross profit | 2,740,000 |
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Selling and administrative expenses Depreciation | 1,350,000 150,000 |
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Operating profit | 1,240,000 |
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Interest expenses | 140,000 |
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Income before tax | 1,100,000 |
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Tax expense | 440,000 |
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Net income | $660,000
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Balance Sheet |
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| 2015 | 2014 |
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Cash | $200,000 | $50,000 |
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Accounts receivable | 1,200,000 | 950,000 |
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Inventory | 1,840,000 | 1,500,000 |
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Total current assets | 3,240,000 | 2,500,000 |
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Fixed assets | 3,200,000 | 3,000,000 |
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Total assets | $6,440,000 | $5,500,000 |
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Accounts payable | 800,000 | 720,000 |
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Bank loan | 600,000 | 100,000 |
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Total current liabilities | 1,400,000 | 820,000 |
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Bonds payable | 900,000 | 1,000,000 |
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Total liabilities | 2,300,000 | 1,820,000 |
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Common stock (130,000 shares) | 300,000 | 300,000 |
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Retained earnings | 3,840,000 | 3,380,000 |
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Total liabilities & equity | $6,440,000 | $5,500,000 |
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Note: The common shares are trading in the stock market for $40 each |
1. The firm's current ratio for 2015 is _____.
2. The firm's quick ratio for 2015 is _____.
3. The cash ratio for 2015 is _____.
4. The firm's interest coverage ratio for 2015 is _____.
5. The firm's average collection period for 2015 is _____.
6. The firm's inventory turnover ratio for 2015 is _____.
7. The firm's asset turnover ratio for 2015 is _____.
8. The firms financial leverage ratio for 2015 is_______.
9. The firm's profit margin ratio for 2015 is _____ percent.
10. The firm's return on equity ratio for 2015 is _____.
11. The firms return on assets ratio for 2015 is _____.
12. The firm's P/E ratio for 2015 is _____.
13. The firm's market to book value ratio for 2015 is _____.
14. The firms price to sales ratio for 2015 is_____.
15. The firms P/E to growth (PEG) ratio for 2015 is_____.
(Analysts expect the firms EPS to grow at a 5% CAGR for the next five years.
16. The firms Enterprise value (EV)/EBITDA ratio for 2015 is _____.
17. Calculate the firms return on equity (ROE) using the DuPont identity.
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