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Help please Q.5 As the head of the Planning and Analysis department you have received the following report for the period just ended You are

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Q.5 As the head of the Planning and Analysis department you have received the following report for the period just ended You are Senior Analyst at Ajax Inc., a manufacturer of construction equip- ment, which is considering the purchase of one of its suppliers, Zitron Ind- ustries. The purchase has been given serious consideration by Ajax's board of directors, and several discussions have taken place between the management of both companies. Zitron has submitted financial data for the past three years. Your boss, Ajax's Controller, has asked you to analyze Zitron's financial statements and you have prepared the following ratios comparing Zitron's three-year perform- ance along with the current year's ratios for your company, Ajax, as well as the industry averages 2018 2017 2016 Averages 2018 Zitron Ajax | Industry A. Inventory Turnover 3.2X 3.5X 3.6X 3.4X 4.0X B. Average sale period - Days 114Dys 104Dys 101Dys 106Dys | 91Dys C. Accounts Receivable Turnover 6.98 7.25 7.83 7.78 | 8.11 D. Average Daily Sales in AR 52.3 50.34 46.6 46.9 | 45.0 E. Current Ratio 1.65 1.95 1.70 2.30 1.95 F. Times Interest Earned 3.87 3.46 3.28 3.56 | 3.50 G. Debt/Equity Ratio 0.50 0.46 0.40 0.45 | 0.50 H. Sales Growth/(Decline) 2.5% 1.5% (1.5%) | 4.5% 5.6% I. Margin 6.0 5.9 5.6 6.0 6.5 J. Turnover [T/O] 5.3 5.6 5.9 5.6 6.0 In order to complete your report you must interpret your findings and make rec-ommendations on how this information will be useful to the management of the company. Required: Complete the following report on the answer sheet: Use the letters above to identify the various groups of ratios and provide comments on how Ajax and Zitron are performing in each category as opposed to how the industry is performing - An example has been done to start the analysis. Ajax Manufacturing Inc. Report on Ajax Inc vs Zitron vs Industry [ List the ratios by letter] 2017 2017 Zitron: 2017 2016 2015 Ajax Industry Example: Profitability/Growth I. Sales Growth/(Decline) 2.5% 1.5% (1.5%) |4.5% | 5.6%

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