donna jamison was recently hired as a financial analyst by Compution Industries, as a manufacturer of electronic components. her first task was toncinduct a financial analysis of the firm covering the last two years. to begin, she gathered the following financial statements and other data.

assume that you are donna jamisons assistant and thatnshe has asked you to help her prepare a report that evaluates the companys financial condition. answer the following questions: a. what can you conclude about the companys financial condition from its statement of cash flow? b. what is the purpose of financial ratio analysis, and what are the five major categories of ratios? c. what are Computrons current quick ratios? what do they tell you about the companys liquidity position? d. what is Computrons inventory turnover, days sales outstanding, fixed assets turnover and total assets turnover ratios? how does the firms utilization of assets stack up againstbthat of the industry? e. what are the firms debt, times-interest-earned, and fixed charge coverage ratios? how does Computron compare to the industrynwith respect to financial leverage? what conclusions can you draw from these ratios? f. calculate and discuss the firms profitability ratios - that is, its net profit margin, returnnon assets (ROA), and return on equity (ROE).

CFIN5-CHAPTER 2 grative Problem a Jamison was recently hired as a financial analyst by Computron Industries, a manufacturer of onic components. Her first task was to conduct a financial analysis of the fim covering the lat two .To begin, she gathered the following financial statements and other data Balance Sheets Assets 2015 2016 $ 52,000 $ 57,600 Cash Accounts receivable 402,000 351,200 Inventories 836,000 715,200 Total current assets $1,290,000 $1,124,000 Gross fixed assets 527,000 491,000 Less accumulated depreciation 166,200 146,200 $ 360,800 $ 344,800 Net foxed assets Total assets S1.650.800 $1468.800 Liabilities and Equity $ 175,200 Accounts payable $145,600 Notes payable 225,000 200,000 Accruals 140,000 136,000 $ 540,200 Total current liabilities 481,600 Long-term debt 424,612 323,432 Common stock (100,000 shares) 460,000 460,000 Retained earnings 225,988 203,768 $ 685,988 Total equity $ 663,768 Total liabilities and equity $1.650,800 $1.468.800 (continued) 2015 2016 Income Statements $3,432,000 $3,850,000 Sales (2,864,000) ( 340,000) (3,250,000) 430,300) Cost of goods sold Other expenses, 18.900) $3,222.900 $ 209,100 62.500) $ 146,600 20,000) Depreciation Total operating costs $3,700,300 $ 149,700 EBIT L76,000) Interest expense 73,700 $ EBT 58,640) L 29,480) Taxes (40%). S 87.960 $0.880 S 44.220 Net income $0.442 EPS Statement of Cash Flows (2016) Operating Activities $ 44,220 Net income Other additions (sources o f cash) 20,000 Depreciation 29,600 Increase in accounts payable 4,000 Increase in accruals Subtractions (uses of cash) 50,800) Increases in accounts receivable (120,800) Increase in inventories SL73 780) Net cash flow from operations Long-Term Investing Activities SL36.000) Investment in fixed assets Financing Activities $ 25,000 Increase in notes payable 101,180 Increase in long-term debt 22,000) Payment of cash dividends $104,180 Net cash flow from financing $.5,600) Net reduction in cash account 57 600 Cash at beginning of year $ 52.000 Cash at end of year (continued) 2015 50 2016 $6.00 Other Data December 31 stock price 100,000 100,000 Number of shares $0.22 $022 Dividends per share $40,000 $40,000 Lease payments Industry average data for 2016 Ratio Industry Average 2.7x Current 1.0x Quick 6.0x Inventory turnover 32.0 days Days sales outstanding (DSO) 10.7x Fixed assets turnover Total assets turnover 2.6x Debt ratio 50.0% TIE 2.5x Fixed charge coverage 2.1x Net profit margin 3.5% ROA 9.1 % ROE 18.2% Price/earnings 14.2x Market/book 1.4x Assume that you are Donna Jamison's assistant and that she has asked you to help her prepare a report that evaluates the company's financial condition. Answer the following questions: a What can you condlude about the company's financial condition from its statement of cash flows? b. What is the purpose of financial ratio analysis, and what are the five major categories of ratios? c What are Computron's.current and quick ratios? What do they tell you about the company's liquidity position? d What is Computron's inventory turnover, day's sales outstanding. fixed assets turnover and total assets tumover ratios? How does the firm's utilization of assets stack up against that of the industry? What are the firm's debt, times-interest-eamed, and fixed charge coverage ratios? How does Computron compare to the industry with respect to financial leverage? What condlusions can you draw from these ratios? Calculate and discuss the firm's profitability ratios-that is, its net profit margin, return on assets (ROA) and retun on equity (ROE)