How has the firms liquidity changed from 2017 to 2016?

Compute the current ratio & quick ratio and determine if the firms liquidity has increased or decreased?

What are some implications for this result?

How has the firms long-term solvency changed from 2017 to 2016?

Compute the debt ratio and determine if the firm has increased or decreased leverage?

Compute the firms times-interest earned & cash coverage ratio?

Can the firm easily make their interest payments?

Data

Table 1: Unilate Textiles: December 31 Comparative Balance Sheets (millions of dollars)

2017

2016

Assets

Cash and marketable securities

$15.0

$40.0

Accounts receivable

180.0

160.0

Inventory

270.0

200.0

Total current assets

$465.0

$400.0

Gross plant and equipment

$680.0

$600.0

Less: Accumulated depreciation

(300.0)

(250.0)

Net plant and equipment

380.0

350.0

Total assets

$845.0

$750.0

Liabilities and equity

Accounts payable

$30.0

$15.0

Accruals

60.0

55.0

Notes payable

40.0

35.0

Total current liabilities

$130.0

$105.0

Long-term bonds

300.0

255.0

Total liabilities

$430.0

$360.0

Common stock

130.0

130.0

Retained earnings

285.0

260.0

Owner's equity

$415.0

$390.0

Total liabilities and equity

$845.0

$750.0

NOTE: Unilate has no preferred stock, so owner's equity includes common equity only.

Table 2: Unilate Textiles; Comparative Income Statements for
Years Ending December 31(millions of dollars, except per share data)
	2017		2016
Net Sales		$1,500.0		$1,435.0
Cost of goods sold		(1,230.0)		(1,176.7)
Gross profit		$270.0		$258.3
Fixed operating expenses except depreciation		(90.0)		(85.0)
Depreciation		(50.0)		(40.0)
Earnings before interest and taxes (EBIT)		$130.0		$133.3
Interest		(40.0)		(35.0)
Earning before taxes (EBT)		$90.0		$98.3
Taxes (40%)		(36.0)		(39.3)
Net income		$54.0		$59.0
Preferred dividends		0.0		0.0
Earnings available to common stock holders (EAC)		$54.0		$59.0
Common dividends		(29.0)		(27.0)
Additions to retained earnings		$25.0		$32.0
Per share Data:
Shares outstanding		25.00		25.00
Common stock price		$23.00		$23.00
Earnings per share		$ 2.16		$ 2.36
Dividends per share		$ 1.16		$ 1.08

Industry Statistics for 2017

Ratio	Industry Average
Short Term Solvency Ratios
Current Ratio	4.1 times
Quick Ratio	2.1 times
Long Term Solvency Ratios
Debt Ratio	45%
Times Interest Earned	6.5 times
Asset Management Ratios
Inventory Turnover	7.4 times
Days Sales Outstanding	32.1 days
Total Asset Turnover	2.1 times
Profitability Ratios
Profit Margin	4.7%
Return on Assets	12.6%
Return on Equity	17.2%
Market Value Ratios
P/E ratio	13.0 times
Market-to-Book Ratio	2.0 times