I need to know is the common size percentage done correctly.

Demetra

Goup Number: Group Project 2 - Financial Condition Analysis John Green, a recent graduate with four years of for-profit health management experience, was recently brought in as assistant to the chairman of the board of Digital Diagnostics, a manufacturer of clinical diagnostic equipment. The company had doubled its plant capacity, opened new sales offices outside its home territory, and launched an expensive advertising campaign. Digital's results were not satisfactory, to put it mildly. Its board of directors, which consisted of its president and vice president plus its major stockholders (who were all local business people), was most upset when directors learned how the expansion was going. Suppliers were being paid late and were unhappy, and the bank was complaining about the cut off credit. As a result, Eddie Sanders, Digital's president, was informed that changes would have to be made, and quickly, or he would be fired. Also, at the board's insistence, John Green was brought in and given the job of assistant to Wendy Smith, a retired banker who was Digital's chairwoman and largest stockholder. Sanders agreed to give up a few of his golfing days and help nurse the company back to health, with Green's assistance. Green began by gathering financial statements and other data, shown below. The data show the dire situation that Digital Diagnostics was in after the expansion program. Thus far, sales have not been up to the forecasted level, costs have been higher than were projected, and a large loss occurred in Year 2, rather than the expected profit. Green examined monthly data for Year 2 (not given in the case), and he detected an improving pattern during the year. Monthly sales were rising, costs were falling, and large losses in the early months had turned to a small profit by December. Thus, the annual data look somewhat worse than final monthly data. Also, it appears to be taking longer for the advertising program to get the message across, for the new sales offices to generate sales, and for the new manufacturing facilities to operate efficiently. In other words, the lags between spending money and deriving benefits were longer thanDigital's managers had anticipated. For these reasons, Green and Sanders see hope for the companyprovided it can survive in the short run. Green must prepare an analysis of where the company is now, what it must do to regain its financial health, and what actions should be taken. Green requested your group to complete this assigned task for him. Use this Excel Workbook to perform the quantitative parts of the analysis and prepare the report as a Word document. The report shpuld include only the interpretations of the quantitative results. How you found these results are to be shown in this E Submit both files via Blackboard as instructed. Digital Diagnostics Statement of Operations Yr 1 Actual Yr 2 Actual Yr 3 Projected Revenue: Net patient service revenue $3,432,000 $5,834,400 $7,035,600 Other revenue $0 $0 $0 Total revenues $3,432,000 $5,834,400 $7,035,600 Expenses: Salaries and benefits $2,864,000 $4,980,000 $5,800,000 Supplies $240,000 $620,000 $512,960 Insurance and other $50,000 $50,000 $50,000 Drugs $50,000 $50,000 $50,000 Depreciation $18,900 $116,960 $120,000 Interest $62,500 $176,000 $80,000 Total expenses $3,285,400 $5,992,960 $6,612,960 Operating income $146,600 -$158,560 $422,640 Provision for income taxes $58,640 -$63,424 $169,056 Net income $87,960 -$95,136 $253,584 Digital Diagnostics Balance Sheet Yr 1 Actual Yr 2 Actual Yr 3 Projected Assets Current assets: Cash Marketable securities Net accounts receivable Inventories Total current assets Property and equipment Less accumulated depreciation Net property and equipment Total assets Liabilities and shareholders' equity Current liabilities: Accounts payable Accrued expenses Notes payable Current portion of long-term debt Total current liabilities Long-term debt Shareholders' equity: Common stock Retained earnings Total shareholders' equity Total liabilities and shareholders' equity Other data: Stock price Shares outstanding Tax rate Lease payments $9,000 $48,600 $351,200 $715,200 $1,124,000 $491,000 $146,200 $344,800 $1,468,800 $7,282 $20,000 $632,160 $1,287,360 $1,946,802 $1,202,950 $263,160 $939,790 $2,886,592 $14,000 $71,632 $878,000 $1,716,480 $2,680,112 $1,220,000 $383,160 $836,840 $3,516,952 $145,600 $136,000 $120,000 $80,000 $481,600 $323,432 $324,000 $284,960 $640,000 $80,000 $1,328,960 $1,000,000 $359,800 $380,000 $220,000 $80,000 $1,039,800 $500,000 $460,000 $203,768 $663,768 $1,468,800 $460,000 $97,632 $557,632 $2,886,592 $1,680,936 $296,216 $1,977,152 $3,516,952 $8.50 100,000 40% $40,000 $6.00 100,000 40% $40,000 $12.17 250,000 40% $40,000 ANSWER Yr 1 Actual Profitability ratios Total margin Return on assets Return on equity Liquidity ratios Current ratio Days cash on hand Debt management (capital structure) ratios Debt ratio Debt to equity ratio Times-interest-earned ratio Cash flow coverage ratio Yr 2 Actual Yr 3 Projected Industry Average 3.6% 9.0% 17.9% 2.70 22.0 50.0% 2.5 6.2 8.00 Asset management (activity) ratios Fixed asset turnover Total asset turnover Days sales outstanding Other ratios Average age of plant Earnings per share Book value per share Price/earnings ratio Market/book ratio 7.00 2.50 32.0 6.1 n/a n/a 16.20 2.90 Digital Diagnostics Common Size Statement of Operations Yr 1 Actual Revenue: Net patient service revenue Other revenue Total revenues Expenses: Salaries and benefits Supplies Insurance and other Drugs Depreciation Interest Total expenses Operating income Provision for income taxes Net income Assets Current assets: Cash Marketable securities Net accounts receivable Inventories Total current assets Property and equipment Less accumulated depreciation Net property and equipment Total assets Liabilities and shareholders' equity Current liabilities: Accounts payable Yr 2 Actual Yr 3 Projected Industry Average 100.0% 0.0% 100.0% 100.0% 0.0% 100.0% 100.0% 0.0% 100.0% 100.0% 0.0% 100.0% 83.4% 7.0% 1.5% 1.5% 0.6% 1.8% 95.7% 4.3% 1.7% 2.6% 85.4% 10.6% 0.9% 0.9% 2.0% 3.0% 102.7% -2.7% -1.1% -1.6% 82.4% 7.3% 0.7% 0.7% 1.7% 1.1% 94.0% 6.0% 2.4% 3.6% 84.5% 3.9% 0.3% 0.3% 4.0% 1.1% 94.1% 5.9% 2.4% 3.5% Digital Diagnostics Common Size Balance Sheet Yr 1 Actual Yr 2 Actual Yr 3 Projected Industry Average 0.6% 3.3% 23.9% 48.7% 76.5% 33.4% 10.0% 23.5% 100.0% 0.3% 0.7% 21.9% 44.6% 67.4% 41.7% 9.1% 32.6% 100.0% 0.4% 2.0% 25.0% 48.8% 76.2% 34.7% 10.9% 23.8% 100.0% 0.3% 0.3% 22.3% 41.2% 64.1% 53.9% 18.0% 35.9% 100.0% 9.9% 11.2% 10.2% 10.2% Accrued expenses Notes payable Current portion of long-term debt Total current liabilities Long-term debt Shareholders' equity: Common stock Retained earnings Total shareholders' equity Total liabilities and shareholders' equity 9.3% 8.2% 5.4% 32.8% 22.0% 9.9% 22.2% 2.8% 46.0% 34.6% 10.8% 6.3% 2.3% 29.6% 14.2% 9.5% 2.4% 1.6% 23.7% 26.3% 31.3% 13.9% 45.2% 100.0% 15.9% 3.4% 19.3% 100.0% 47.8% 8.4% 56.2% 100.0% 20.0% 30.0% 50.0% 100.0% es offices outside its ow the expansion g about the cut off ve to be made, and d given the job of kholder. Sanders Green's assistance. w the dire situation ar 2, rather than osses in the early rse than final monthly oss, for the new . In other words, had anticipated. n the short run. financial health, report as a Word document. nd these results are to be shown in this Excel Workbook