Because of these external threats, management of Imperial Electronics La pues difficult times ahead. Company management is now watching its financial calculate and comment on Imperial Electronics Led December 31, 2012, finance On the basis of the information contained in the company's financial statemen ge. The common shares et CASE 2: IMPERIAL ELECTRONICS LTD. Imperial Electronics Ltd. is a publicly owned company with 100,000 common shares outstanding. At the last executive committee meeting, Sandra Redgrave, CEO of the company, informed the board members of the economic slowdown that she anticipated during the next several years. She also told them that several U.S. firms were consid- ering becoming more aggressive in the industry, particularly in the Canadian market. 173 Scanned by CamScanner 172 CHAPTER 4 Financial Statement Analysis closely to keep the firm under control. ratios by comparing them with the industry on the stock market at $120. a. current ratio b quick ratio C. debt-to-total-assets ratio d. debt-to-equity ratio e times-interest-earned ratio f. fixed-charges coverage ratio average collection period h. inventory turnover ratio i. capital assets turnover ratio j. total assets turnover ratio k. profit margin on revenue ratio 1. return on revenue ratio m. return on total assets ratio n. return on equity ratio o. earnings per share p.price/earnings ratio In July 2013, management of Imperial Electronics Ltd. is planning to $3,000,000 to modernize its capital assets and expand. The management com is considering borrowing funds from external sources. However, before meeting te investors, the committee wants to examine the amount that could be generated nally before June 30, 2013 Industry financial ratios are as follows: a. current ratio 1.95 times b. quick ratio 1.03 times c. debe-to-total-assets ratio 55% d. debt-to-equity ratio 1.21 times e times interest-earned ratio f. fixed-charges coverage ratio 6.43 times 4.51 times & average collection period h. inventory turnover ratio 35.00 days 7.00 times i. capital assets turnover ratio j. total assets turnover ratio k profit margin on revenue ratio 2.90 times 1. return on revenue ratio 2.10% 5.10 times 9.10% Lases 113 m. return on total assets ratio 6,00% n. return on equity ratio 21.00% 0. earnings per share $8.50 p. price/earnings ratio 10.30 times Assuming that the company is just as efficient as the industry in managing its inventories and trade receivables, calculate the amount of cash it would generate by June 30, 2013. Also, assume that in 2013 revenue will increase by 9%, return on rev- enue will be 5%, depreciation will increase to $400,000, and cost of sales in relation to revenue will improve to 72%. 30.000.000 (23.000.000) 7.000.000 Imperial Electronics Ltd. Statement of Income For the year ended December 31, 2012 (in 5) Revenue Cost of sales Gross profit Expenses: Distribution costs (2,500,000) Lease (125,000) Depreciation (300,000) Administrative expenses (1,700,000) Total expenses Finance costs Total Profit before taxes Income tax expense Profit for the year (4.625.000) (400,000) (5.025.000) 1.975,000 (900.000) 1.075,000 Because of these external threats, management of Imperial Electronics La pues difficult times ahead. Company management is now watching its financial calculate and comment on Imperial Electronics Led December 31, 2012, finance On the basis of the information contained in the company's financial statemen ge. The common shares et CASE 2: IMPERIAL ELECTRONICS LTD. Imperial Electronics Ltd. is a publicly owned company with 100,000 common shares outstanding. At the last executive committee meeting, Sandra Redgrave, CEO of the company, informed the board members of the economic slowdown that she anticipated during the next several years. She also told them that several U.S. firms were consid- ering becoming more aggressive in the industry, particularly in the Canadian market. 173 Scanned by CamScanner 172 CHAPTER 4 Financial Statement Analysis closely to keep the firm under control. ratios by comparing them with the industry on the stock market at $120. a. current ratio b quick ratio C. debt-to-total-assets ratio d. debt-to-equity ratio e times-interest-earned ratio f. fixed-charges coverage ratio average collection period h. inventory turnover ratio i. capital assets turnover ratio j. total assets turnover ratio k. profit margin on revenue ratio 1. return on revenue ratio m. return on total assets ratio n. return on equity ratio o. earnings per share p.price/earnings ratio In July 2013, management of Imperial Electronics Ltd. is planning to $3,000,000 to modernize its capital assets and expand. The management com is considering borrowing funds from external sources. However, before meeting te investors, the committee wants to examine the amount that could be generated nally before June 30, 2013 Industry financial ratios are as follows: a. current ratio 1.95 times b. quick ratio 1.03 times c. debe-to-total-assets ratio 55% d. debt-to-equity ratio 1.21 times e times interest-earned ratio f. fixed-charges coverage ratio 6.43 times 4.51 times & average collection period h. inventory turnover ratio 35.00 days 7.00 times i. capital assets turnover ratio j. total assets turnover ratio k profit margin on revenue ratio 2.90 times 1. return on revenue ratio 2.10% 5.10 times 9.10% Lases 113 m. return on total assets ratio 6,00% n. return on equity ratio 21.00% 0. earnings per share $8.50 p. price/earnings ratio 10.30 times Assuming that the company is just as efficient as the industry in managing its inventories and trade receivables, calculate the amount of cash it would generate by June 30, 2013. Also, assume that in 2013 revenue will increase by 9%, return on rev- enue will be 5%, depreciation will increase to $400,000, and cost of sales in relation to revenue will improve to 72%. 30.000.000 (23.000.000) 7.000.000 Imperial Electronics Ltd. Statement of Income For the year ended December 31, 2012 (in 5) Revenue Cost of sales Gross profit Expenses: Distribution costs (2,500,000) Lease (125,000) Depreciation (300,000) Administrative expenses (1,700,000) Total expenses Finance costs Total Profit before taxes Income tax expense Profit for the year (4.625.000) (400,000) (5.025.000) 1.975,000 (900.000) 1.075,000