Jenny Cochran was brought in as assistant to Computron's chairman, who had the task of getting the company back into a sound financial position. Cochran must prepare an analysis of where the company is now, what it must do to regain its financial health, and what actions to take. Your assignment is to help her answer the following questions. Provide clear explanations, not yes or no answers. Use the recent and projected financial information shown next. Note: "E" denotes the "estimated forecast." Also, Computron has no amortization. Note: "E" denotes the "estimated forecast." \begin{tabular}{|ll} \hline e. & Calculate the projected debt ratio, the debt-to-equity ratio, liabilities-to-assets \end{tabular} ratio, earnings multiplier, times-interest-earned, and EBITDA coverage ratios. How does Computron compare with the industry with respect to financial leverage? What can you conclude from these ratios? Slides #27-34. f. Calculate the projected price/earnings ratio and market/book ratio. Do these ratios indicate that investors are expected to have a high or low opinion of the company? Slides #35-38. g. Perform a common size analysis and percent change analysis. What do these analyses tell you about Computron? Slides #39-45. h. Use the extended DuPont equation to provide a breakdown of Computron's projected return on equity. How does the projection compare with the previous years and with the industry's DuPont equation? Slides #46, 48-49. Jenny Cochran was brought in as assistant to Computron's chairman, who had the task of getting the company back into a sound financial position. Cochran must prepare an analysis of where the company is now, what it must do to regain its financial health, and what actions to take. Your assignment is to help her answer the following questions. Provide clear explanations, not yes or no answers. Use the recent and projected financial information shown next. Note: "E" denotes the "estimated forecast." Also, Computron has no amortization. Note: "E" denotes the "estimated forecast." \begin{tabular}{|ll} \hline e. & Calculate the projected debt ratio, the debt-to-equity ratio, liabilities-to-assets \end{tabular} ratio, earnings multiplier, times-interest-earned, and EBITDA coverage ratios. How does Computron compare with the industry with respect to financial leverage? What can you conclude from these ratios? Slides #27-34. f. Calculate the projected price/earnings ratio and market/book ratio. Do these ratios indicate that investors are expected to have a high or low opinion of the company? Slides #35-38. g. Perform a common size analysis and percent change analysis. What do these analyses tell you about Computron? Slides #39-45. h. Use the extended DuPont equation to provide a breakdown of Computron's projected return on equity. How does the projection compare with the previous years and with the industry's DuPont equation? Slides #46, 48-49
