Question
Comprehensive Ratio Analysis The Jimenez Corporation's forecasted 2019 financial statements follow, along with some industry average ratios. Jimenez Corporation: Forecasted Balance Sheet as of December
Comprehensive Ratio Analysis
The Jimenez Corporation's forecasted 2019 financial statements follow, along with some industry average ratios.
Jimenez Corporation: Forecasted Balance Sheet as of December 31, 2019
| Assets | |
| Cash | $ 69,000 |
| Accounts receivable | 439,000 |
| Inventories | 897,000 |
| Total current assets | $1,405,000 |
| Fixed assets | 431,000 |
| Total assets | $1,836,000 |
| Liabilities and Equity | |
| Accounts payable | $ 332,000 |
| Notes payable | 120,000 |
| Accruals | 150,000 |
| Total current liabilities | $ 602,000 |
| Long-term debt | 403,960 |
| Common stock | 575,330 |
| Retained earnings | 254,710 |
| Total liabilities and equity | $1,836,000 |
Jimenez Corporation: Forecasted Income Statement for 2019
| Sales | $4,290,000 | |
| Cost of goods sold (excluding depreciation) | 3,580,000 | |
| Selling, general, and administrative expenses | 375,320 | |
| Depreciation | 154,000 | |
| Earnings before taxes (EBT) | $ 180,680 | |
| Taxes (40%) | 72,272 | |
| Net income | $ 108,408 | |
| Jimenez Corporation: Per Share Data for 2019 | ||
| EPS | $ 4.71 | |
| Cash dividends per share | $ 0.95 | |
| P/E ratio | 4.0 | |
| Market price (average) | $ 18.85 | |
| Number of shares outstanding | 23,000 | |
| Industry Ratiosa | ||
| Quick ratio | 1.0 | |
| Current ratio | 2.7 | |
| Inventory turnoverb | 7.0 | |
| Days sales outstandingc | 32.0 | days |
| Fixed assets turnoverb | 13.0 | |
| Total assets turnoverb | 2.6 | |
| Return on assets | 9.1 | % |
| Return on equity | 18.2 | % |
| Profit margin on sales | 3.5 | % |
| Debt-to-assets ratio | 21.0 | % |
| Liabilities-to-assets ratio | 50.0 | % |
| P/E ratio | 5.0 | |
| Price/Cash flow ratio | 3.5 | |
| Market/Book ratio | 3.5 | |
| Notes: | ||
| aIndustry average ratios have been stable for the past 4 years. | ||
| bBased on year-end balance sheet figures. | ||
| cCalculation is based on a 365-day year. | ||
Calculate Jimenez's 2019 forecasted ratios, compare them with the industry average data, and comment briefly on Jimenez's projected strengths and weaknesses. Assume that there are no changes from the prior period to any of the operating balance sheet accounts. Do not round intermediate calculation. Round DSO to the nearest whole number. Round the other ratios to one decimal place.
| Ratios | Firm | Industry | Comment |
| Quick ratio | 1.0 | -Select-StrongWeakItem 2 | |
| Current ratio | 2.7 | -Select-StrongWeakItem 4 | |
| Inventory turnover | 7.0 | -Select-PoorHighItem 6 | |
| Days sales outstanding | days | 32 days | -Select-PoorHighItem 8 |
| Fixed assets turnover | 13.0 | -Select-PoorHighItem 10 | |
| Total assets turnover | 2.6 | -Select-PoorHighItem 12 | |
| Return on assets | % | 9.1% | -Select-BadGoodItem 14 |
| Return on equity | % | 18.2% | -Select-BadGoodItem 16 |
| Profit margin on sales | % | 3.5% | -Select-BadGoodItem 18 |
| Debt ratio | % | 21.0% | -Select-LowHighItem 20 |
| Liabilities-to-assets | % | 50.0% | -Select-LowHighItem 22 |
| EPS | $4.71 | n.a. | -- |
| Stock Price | $23.57 | n.a. | -- |
| P/E ratio | 5.0 | -Select-PoorHighItem 24 | |
| Price/Cash flow ratio | 3.5 | -Select-PoorHighItem 26 | |
| Market/Book ratio | 3.5 | -Select-PoorHighItem 28 |
So, the firm appears to be -Select-badlywellItem 29 managed.
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