I need help with these solitions referring to the activity ratio portion
Part 2 In this part of your assignment, you will compose an analytical study reporting your results from Part 1. The CEO of your company is forming a task force to review the financials and present a review for acquisition of ABC Company. Based on ABC's previous 3 years of financials, determine if this would be a good acquisition. You must form the task force to complete the task. The CEO would like most of the departments to participate in the process. Using each department's area of expertise, what information would each of the following departments contribute to the final decision? Provide a minimum one-paragraph response for each department. Finance Department Sales Department Marketing Department Human Resources Legal Department Part 3 After your team has provided their input on the effect the acquisition will have on their department, perform an overall analysis to explain your recommendation to the CEO. Your analysis should include the following: Explain how the company is trending based on the year-over-year ratios. Compare the company to the industry average in Appendix A in the Excel workbook in areas of profitability, management effectiveness, and efficiency. Based on the above, summarize the pros and cons of ABC Company using both the year- over-year ratio analysis from Part 1 and the industry average comparisons from Part 3. Provide the team's final recommendation as to whether or not the CEO should invest in ABC Company. Ratio Calculations Liquidity Ratios Current Ratio Quick Ratio 5 Activity Ratios 3 Inventory Turnover Accounts Recievables Turnover 0 Total Asset Turnover 1 Average Collection Period 2 3 Financing Ratios 4 Debt Ratio 5 Debt-to-Equity Ratio 6 Times Interest Earned Ratio 18 Market Ratios 19 Earnings per Share (EPS) 20 Price Earnings (PE) 21 22 Profitability Ratios 23 Return on Equity (ROE) 24 Return on Assets (ROA) 25 Net Profit Margin 26 Operating Profit Margin 27 no 2015 8.11 72.19 2.38 5.09 2014 8.06 72.15 2.34 5.12 Formula Used (Write out formulas) 7.97 COGS/Average Inventory 72.83 Net sales/Average Accounts Receivable 2.35 Net Sales/Average Total Assets 5.01 (Accounts Receivable/Total Net Sales)"365days HEL 2013 Activity Ratios Inventory Turnover Accounts Receivables Turnover Total Asset Turnover Average Collection Period 3. Using the data from the Income Statement and Balance Sheet, provide the correct calculation of the financing ratios. Include the proper assessment of outcomes as positive or negative trends when all three ratio outcomes are factored as a group. Period Ending Total Sales Cost of Goods Sold Gross Profit Selling General and Administrative Operating Profit Total Other Income/Expenses Net Earnings before Interest and Taxes Interest Expense Income Before Tax income Tax Expense Net Income from Continuing Ops Discontinued Operations Net Income (Net Profit) 14,000,000 Shares outstanding Market Share price per share ABC Company Balance Sheet Period Ending Assets Current Assets Cash and Cash Equivalents Net Receivables Inventory Other Current Assets Total Current Assets Property Plant and Equipment Goodwill Other Assets Total Assets ABC Company income Statement 31-Dec-15 $485,651,000 365,086,000 120,565,000 93,418,000 27,147,000 113,000 27,034,000 2,461,000 24,573,000 7,985,000 16,588,000 285,000 $16,303,000 $10.00 2015 $9,135,000 6,778,000 45,141,000 2,224,000 63,275,000 116,655,000 18,102,000 5,671,000 203,706,000 31-Dec-14 $476,294,000 358,069,000 118,225,000 91,353,000 26,872,000 119,000 26,753,000 2,335,000 24,418,000 8,105,000 16,313,000 144,000 $16,169,000 $9.00 31-Dec-13 $475,210,000 350,400,000 124,810,000 90,343,000 34,467,000 115,000 34,352,000 2,200,000 32,152,000 9,800,000 22,352,000 182,000 $22,170,000 $8.50 2014 2013 $7,281.000 56,789,000 6,525,000 6,677,000 44,858,000 43,989,000 2,369,000 2,199,000 61,185,000 59,502,000 117,907,000 120,300,000 19.510,000 17,900,000 6,149,000 4,500,000 204,751,000 202,202,000 Current Liabilities Accounts Payable Other current bles Short-term Debt Total Current Liabilities Long-term Debt Deferred Long-term Liability charges Monority Interest Total Liabilities Miscellaneous Stock Options Warrants Common Stock Retained Earnings Captal Surplus Other Stockholders Equity Total Stockholders Equity Total Liabilities & Stockholders Equity of Shares Outstanding Market share price per share 2015 58,583,000 6,689,000 65,272,000 43,692.000 8,805,000 4,543,000 122,312,000 0 323,000 85,777,000 2,462,000 -7,168,000 81,394,000 201,706,000 14,000,000 $10.00 2014 57,174,000 89,000 12,082,000 69,345,000 44,559,000 8,017,000 5,084,000 127,005,000 0 323,000 76,566,000 2,362,000 -1,505,000 77,746,000 204,751,000 14,000,000 $9.00 2013 56,210,000 55,000 14,050,000 70,315,000 45,324,000 13.553.000 6.875,000 136,067,000 323,000 65,750,000 2,262,000 2,200,000 66.135.000 202,202,000 14,000,000 $8.50 Appendix A Technology 3-Year Average for Industry Averages Profitability Gross Margin 66.15% Operating Profit Margin 12.04% Net Profit Margin 6.01% Earnings per Share 1.49 Management Effectiveness Return on Equity 12.40% Return on Assets 5.61% Return on Investment 14.42 Quick Ratio 2.87 Current Ratio 2.57 Debt-to-Equity 61.01% Total Debt to Equity 57.08% Efficiency Total Asset Turnover 0.55 Inventory Turnover 44.98 Accounts Receivable Turnover 8.21 Part 2 In this part of your assignment, you will compose an analytical study reporting your results from Part 1. The CEO of your company is forming a task force to review the financials and present a review for acquisition of ABC Company. Based on ABC's previous 3 years of financials, determine if this would be a good acquisition. You must form the task force to complete the task. The CEO would like most of the departments to participate in the process. Using each department's area of expertise, what information would each of the following departments contribute to the final decision? Provide a minimum one-paragraph response for each department. Finance Department Sales Department Marketing Department Human Resources Legal Department Part 3 After your team has provided their input on the effect the acquisition will have on their department, perform an overall analysis to explain your recommendation to the CEO. Your analysis should include the following: Explain how the company is trending based on the year-over-year ratios. Compare the company to the industry average in Appendix A in the Excel workbook in areas of profitability, management effectiveness, and efficiency. Based on the above, summarize the pros and cons of ABC Company using both the year- over-year ratio analysis from Part 1 and the industry average comparisons from Part 3. Provide the team's final recommendation as to whether or not the CEO should invest in ABC Company. Ratio Calculations Liquidity Ratios Current Ratio Quick Ratio 5 Activity Ratios 3 Inventory Turnover Accounts Recievables Turnover 0 Total Asset Turnover 1 Average Collection Period 2 3 Financing Ratios 4 Debt Ratio 5 Debt-to-Equity Ratio 6 Times Interest Earned Ratio 18 Market Ratios 19 Earnings per Share (EPS) 20 Price Earnings (PE) 21 22 Profitability Ratios 23 Return on Equity (ROE) 24 Return on Assets (ROA) 25 Net Profit Margin 26 Operating Profit Margin 27 no 2015 8.11 72.19 2.38 5.09 2014 8.06 72.15 2.34 5.12 Formula Used (Write out formulas) 7.97 COGS/Average Inventory 72.83 Net sales/Average Accounts Receivable 2.35 Net Sales/Average Total Assets 5.01 (Accounts Receivable/Total Net Sales)"365days HEL 2013 Activity Ratios Inventory Turnover Accounts Receivables Turnover Total Asset Turnover Average Collection Period 3. Using the data from the Income Statement and Balance Sheet, provide the correct calculation of the financing ratios. Include the proper assessment of outcomes as positive or negative trends when all three ratio outcomes are factored as a group. Period Ending Total Sales Cost of Goods Sold Gross Profit Selling General and Administrative Operating Profit Total Other Income/Expenses Net Earnings before Interest and Taxes Interest Expense Income Before Tax income Tax Expense Net Income from Continuing Ops Discontinued Operations Net Income (Net Profit) 14,000,000 Shares outstanding Market Share price per share ABC Company Balance Sheet Period Ending Assets Current Assets Cash and Cash Equivalents Net Receivables Inventory Other Current Assets Total Current Assets Property Plant and Equipment Goodwill Other Assets Total Assets ABC Company income Statement 31-Dec-15 $485,651,000 365,086,000 120,565,000 93,418,000 27,147,000 113,000 27,034,000 2,461,000 24,573,000 7,985,000 16,588,000 285,000 $16,303,000 $10.00 2015 $9,135,000 6,778,000 45,141,000 2,224,000 63,275,000 116,655,000 18,102,000 5,671,000 203,706,000 31-Dec-14 $476,294,000 358,069,000 118,225,000 91,353,000 26,872,000 119,000 26,753,000 2,335,000 24,418,000 8,105,000 16,313,000 144,000 $16,169,000 $9.00 31-Dec-13 $475,210,000 350,400,000 124,810,000 90,343,000 34,467,000 115,000 34,352,000 2,200,000 32,152,000 9,800,000 22,352,000 182,000 $22,170,000 $8.50 2014 2013 $7,281.000 56,789,000 6,525,000 6,677,000 44,858,000 43,989,000 2,369,000 2,199,000 61,185,000 59,502,000 117,907,000 120,300,000 19.510,000 17,900,000 6,149,000 4,500,000 204,751,000 202,202,000 Current Liabilities Accounts Payable Other current bles Short-term Debt Total Current Liabilities Long-term Debt Deferred Long-term Liability charges Monority Interest Total Liabilities Miscellaneous Stock Options Warrants Common Stock Retained Earnings Captal Surplus Other Stockholders Equity Total Stockholders Equity Total Liabilities & Stockholders Equity of Shares Outstanding Market share price per share 2015 58,583,000 6,689,000 65,272,000 43,692.000 8,805,000 4,543,000 122,312,000 0 323,000 85,777,000 2,462,000 -7,168,000 81,394,000 201,706,000 14,000,000 $10.00 2014 57,174,000 89,000 12,082,000 69,345,000 44,559,000 8,017,000 5,084,000 127,005,000 0 323,000 76,566,000 2,362,000 -1,505,000 77,746,000 204,751,000 14,000,000 $9.00 2013 56,210,000 55,000 14,050,000 70,315,000 45,324,000 13.553.000 6.875,000 136,067,000 323,000 65,750,000 2,262,000 2,200,000 66.135.000 202,202,000 14,000,000 $8.50 Appendix A Technology 3-Year Average for Industry Averages Profitability Gross Margin 66.15% Operating Profit Margin 12.04% Net Profit Margin 6.01% Earnings per Share 1.49 Management Effectiveness Return on Equity 12.40% Return on Assets 5.61% Return on Investment 14.42 Quick Ratio 2.87 Current Ratio 2.57 Debt-to-Equity 61.01% Total Debt to Equity 57.08% Efficiency Total Asset Turnover 0.55 Inventory Turnover 44.98 Accounts Receivable Turnover 8.21
