Case Massachusetts Stove Company: Analyzing Strategic

Calculate the financial statement ratios listed in the picture above for MSC under each of the three scenarios for Year 8Year 12. Note: You should create a fourth spreadsheet as part of your preparation of the projected financial statements that will compute the financial ratios.

d.What advice would you give the management of MSC regarding its decision to enter the gas stove market? Your recommendation should consider the profitability and risks of this action as well as other factors you deem relevant.

Please answer showing all work! Thank you!

Exhibit 10.16 Massachusetts Stove Company Financial Statement Ratios (Case 10.2) Year 3 Year 4 Year 5 Year 6 Year 7 8.596 1.3 10.796 8.196 1.7 14.196 8.5% 1.2 10.1% 6.2% 30.6 224,0% 49.196 6.6% 6.5% ( Profit Margin for ROA Total Assets Turnover ROA Profit Margin for ROCE Capital Structure Leverage ROCE Cost of Goods Sold/Sales Depreciation Expense/Sales Facilities Costs Net of Rental Income/Sales Selling Expense/Sales Administrative Expenses/Sales Interest Income/Sales Interest Expense/Sales Income Tax Expense/Income before Taxes Accounts Receivable Turnover Inventory Turnover Fixed Assets Turnover Current Ratio Quick Ratio Days Accounts Receivable Days Inventory Held Days Accounts Payable Cash Flow from Operations/Average Current Liabilities Long-Term Debt/Shareholders' Equity Cash Flow from Operations/Average Total Liabilities Interest Coverage Ratio # # '# 9.3 77.0% 46.4% 4.5% 0.6% 34.4% 2.4% 0.1% 2.7% 28.196 37.4 2.2 2.1 2.11 0.71 10 166 33 5.6 63.4% 47.8% 2.996 1.2% 34.9% 2.196 0.4% 2.196 30.696 61.2 2.9 3.1 1.44 0.40 6 126 16 7.296 1.8 13.196 5.6% 3.9 40.2% 48.8% 2.8% 0.3% 36.8% 2.09 0.4% 2.2% 25.6% 65.3 3.0 3.5 1.75 0.73 6 122 14 6.8% 1.9 13.1% 5.7% 3.0 32.6% 50.5% 2.6% 0.2% 33.9% 4.0 0.6% 1.5% 28.0% 147.9 3.2 4.2 2.44 1.08 3 114 11 38.1% 1,106.2% 93.0% 454.2% 79.4% 226.8% 59.8% 144.5% 63.4% 99.1% 7.6% 20.0% 4.4 23.296 5.4 23.5% 4.4 24.8% 6.1 Exhibit 10.16 Massachusetts Stove Company Financial Statement Ratios (Case 10.2) Year 3 Year 4 Year 5 Year 6 Year 7 8.596 1.3 10.796 8.196 1.7 14.196 8.5% 1.2 10.1% 6.2% 30.6 224,0% 49.196 6.6% 6.5% ( Profit Margin for ROA Total Assets Turnover ROA Profit Margin for ROCE Capital Structure Leverage ROCE Cost of Goods Sold/Sales Depreciation Expense/Sales Facilities Costs Net of Rental Income/Sales Selling Expense/Sales Administrative Expenses/Sales Interest Income/Sales Interest Expense/Sales Income Tax Expense/Income before Taxes Accounts Receivable Turnover Inventory Turnover Fixed Assets Turnover Current Ratio Quick Ratio Days Accounts Receivable Days Inventory Held Days Accounts Payable Cash Flow from Operations/Average Current Liabilities Long-Term Debt/Shareholders' Equity Cash Flow from Operations/Average Total Liabilities Interest Coverage Ratio # # '# 9.3 77.0% 46.4% 4.5% 0.6% 34.4% 2.4% 0.1% 2.7% 28.196 37.4 2.2 2.1 2.11 0.71 10 166 33 5.6 63.4% 47.8% 2.996 1.2% 34.9% 2.196 0.4% 2.196 30.696 61.2 2.9 3.1 1.44 0.40 6 126 16 7.296 1.8 13.196 5.6% 3.9 40.2% 48.8% 2.8% 0.3% 36.8% 2.09 0.4% 2.2% 25.6% 65.3 3.0 3.5 1.75 0.73 6 122 14 6.8% 1.9 13.1% 5.7% 3.0 32.6% 50.5% 2.6% 0.2% 33.9% 4.0 0.6% 1.5% 28.0% 147.9 3.2 4.2 2.44 1.08 3 114 11 38.1% 1,106.2% 93.0% 454.2% 79.4% 226.8% 59.8% 144.5% 63.4% 99.1% 7.6% 20.0% 4.4 23.296 5.4 23.5% 4.4 24.8% 6.1