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 balance 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 ratios. Red Brick Income Statement (for the period ending December 12/31/20x1) Sales $222,000,000 Cost of goods sold 156,000,000 Administrative expenses 28,000,000 Operating income $ 38,000,000 Interest expense 9,000,000 Taxes 500,000 Net Income $ 28,500,000 Red Brick Balance Sheet as of 12/31/20X2 Assets Liabilities and Stockholders' Equity Cash $ 600,000 Accounts payable $ 39,000,000 Accounts receivable 31,000,000 Notes payable 14,000,000 Inventory 73,900,000+ Long-term debt 44,000,000 Plant and equipment 137,000,000 Stockholders' equity 145,500,000 $242,500,000 $ 242,500,000 sales are incredt Previous year's inventory was 555,300,000 Current ratio Quick ratio Inventory turnover Average collection period Debt ratio (debt/total assets) Times-interest-camed Return on equity Return on assets Company's Ratios Industry (Previous Year) Average 1.8:1 2.2:1 0.6:1 0.8:1 5.5x 4.5% 39 days 48 days 2846 4296 4.2 3.8 23.4% 14 19 13.5% 10.16 @ 09: End-ot chay *80% of sales are on credit Previous year's inventory was $55,300,000 Company's Ratios Industry (Previous Year) Average Current ratio 1.8:1 2.2:1 Quick ratio 0.6:1 0.8:1 Inventory turnover 5.5x 4.5x Average collection period 39 days 48 days Debt ratio (debt/total assets) 28% 42% Times-interest-earned 4.2 3.8 Return on equity 23.4% 14.1% Return on assets 13.5% 10.1% Operating profit margin 13.2% 14.9% Net profit margin 9.9% 9.0% 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 the ratio in the previous year. Quick ratio of times is the industry average and fleet | the ratio in the previous year. Inventory turnover ratio of the Industry average and feet the ratio in the previous year. Average collection period of days is Select the industry average and Sub the ratio in the previous year. Debt ratio of % ist the industry average and the ratio in the previous year. Times-interest-earned ratio of is the industry average and feet the ratio in the previous year. Return on equity ratio of Select the industry average and the ratio in the previous year Return on assets ratio of % is set the industry average and the ratio in the previous year, the industry average and the ratio in the previous year. is Operating profit margin ratio of the industry average and Select the ratio in the previous year. Net profit margin ratio of wissel
