Question
Data (millions) 2021 2020 2019 2018 Inventory: Raw Materials 242 198 155 128 Work in progress 116 77 49 33 Finished goods 567 482 398
Data (millions) | 2021 | 2020 | 2019 | 2018 |
Inventory: |
|
|
|
|
Raw Materials | 242 | 198 | 155 | 128 |
Work in progress | 116 | 77 | 49 | 33 |
Finished goods | 567 | 482 | 398 | 257 |
Total inventory | 925 | 757 | 602 | 418 |
Current assets | 1800 | 1423 | 1183 | 841 |
Total Assets | 2643 | 2523 | 2408 | 2090 |
Current Liabilities | 600 | 590 | 525 | 420 |
Sales | 9428 | 8674 | 7536 | 6840 |
Cost of goods sold | 6,328 | 5,474 | 4,445 | 3,557 |
Net income | 754 | 987 | 979 | 958 |
- Compute the current ratio, gross profit ratio, net profit margin ratio, inventory turnover ratio and days in inventory for the four years.
- From the ratios calculated in (a) above, is there justification for Ericas concerns? Discuss the problems, implications, and potential causes of the changes in the ratios over the four years.
(c) As the newly employed chief finance officer in Gentry Electronics, discuss potential remedies to problems discussed in (b) above and how each suggestion will alleviate Ericas fears or improve the performance of the company.
(d) Discuss two possible concerns Erica Harding and the management of Gentry Electronics will possibly raise regarding your suggestions in (c) above and offer two alternative sources of finance for Gentry?
(e) Discuss two financial and operating risks Gentry may face if all suggestions provided by Erica and Jeff are adopted. Are there possible corporate governance and ethical issues which might arise in relation to ideas presented by Erica and Jeff.
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