Joseph Berio is a loan officer with the First Bank of Tennessee. Red Brick, Inc., a major producer of masonry products, has applied for a short-term loan. Red Brick supplies building material throughout the southern states, with brick plants located in Tennessee, Alabama, Georgia, and Indiana. The firm's income statement and halance sheet are given below. The third table presents both a ratio analysis of Red Brick's previous year's financial statements and the Industry averages of the ratlos. Red Brick Income Statement (for the period ending December 12/31/20X1) Sales $154,000,000 Cost of goods sold 121,000,000 Administrative expenses 25,000,000 Operating income $ 8,000,000 Interest expense 14,000,000 200,000 Net Income $ -5,200,000 Red Brick Balance Sheet as of 12/31/20X2 Assets Liabilities and Stockholders' Equity Cash $ 700,000 Accounts payable $ 35,000,000 Accounts receivable 27,000,000 Notes payable 12,000,000 Inventory 76,200,000 Long-term debt 50,000,000 Plant and equipment 134,000,000 Stockholders' equity 140,900,000 $237,900,000 $ 237,900,000 50% of sales are on credit. Previous year's invertory was $.1,000,000. Current ratio Quick ratio Inventory turnover Average collection period Debt ratio (debt/total assets) Times interest earned Return on equity Return on assets Company's Ratios Industry (Previous Year) Average 1.8:1 2.2:1 1 0.6:1 0.8:1 4.2x 4.5x NA 79 days 53 days 29% 40% 0.6 3.6 -4.5% 14.1% -2.7% 10.3% ASD israfit maral 15 Current ratio Quick ratio Inventory turnover Average collection period Debt ratio (debt/total assets) Times-interest earned Company's Ratios Industry (Previous Year) Average 1.8:1 2.2:1 0.6:1 0.8:1 4.2x ZA 4.5x 79 days 53 days 29% 40% 0.6 3.6 . -1.5% 11.1% -2.7% 10.3% 4.0% 15.3% 3.1%. 8.6% Refum on equity % Return on assets Operating profit margin Net profit margin To help decide whether to grant the loan, compute the following ratios and compare the results with the company's previous year ratios and industry averages. Assume there are 365 days in a year. Do not round Intermediate calculations. Round your answers to two decimal places. Current ratio of times is Select the Industry average and Select v the ratio in the previous year. Quick ratio of Inventory turnover ratio of times is Select the industry average and select the ratio in the previous year. is -Select the industry average and Sect the ratio in the previous year. days is Select the industry average and -Select the ratio in the previous year. % is -Select the industry average and -Select the ratio in the previous year. Average collection period of Debl ratio ul Times-interest-earned ratio of is -Select- v the industry average and -Select- the ratio in the previous year. Retum on equity ratio of Is Select the Industry average and -Select- v the ratio in the previous year. Return on assets ratio of 06 is -Select- the industry average and select- the ratio in the previous year. Operating profit margin ratio of % is -Select- the industry average and -Select- the ratio in the previous year. Net profit margin ratio of % is -Select- the industry average and -Select- the ratio in the previous year
