Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

note:i want hand writing for the problem solving. but please write ckearly i want understan how slove. Question 140 points) A firm has been experiencing

image text in transcribed
note:i want hand writing for the problem solving.
but please write ckearly i want understan how slove.
Question 140 points) A firm has been experiencing low profitability in recent years. Perform an analysis of the firm's financial position using the DuPont equation. The firm has no lease payments but has a $2 million sinking fund payment on its debt. The most recent industry average ratios and the firm's financial statements are as follows: Industry Average Ratios Current ratio Fredats turnover Debt-to-capital ratio Total assets turnover Times interesteamed Profit margin EBITDA coverage 9x Return on total assets 9 Inventory turnover 10% Return on common equity Days sales outstanding Return on invested capital Calculation is based on a 5-day year days 585 Balance Sheet as of December 31, 2018 (Millions of Dollars Cash and equivalents Accounts payable Accounts receivable Other current liabilities Inventories Notes payable Total current assets 5303 Total current liabilities Long-term debit Total liabilities Gross fixed assets 225 Common stock Less depreciation 78 Retained earnings Netfied assets $147 Total stockholders equity Total assets Total abilities and equity $135 201 5315 5450 Income Statement for Year Ended December 31, 2018 (Millions of dollars) Net sales $795.0 Cost of goods sold 660.0 Gross profit $135.0 Selling expenses 73.5 EBITDA 5 615 Depreciation expense 12.0 Earnings before interest and taxes (EBIT) $ 49.5 Interest expense Earnings before taxes (ET) $ 45.0 Taxes (40% 18.0 Net income $ 270 (a) Calculate the ratios you think would be useful in this analysis compared to the industry average ratios (b)using DuPont equation, compare the company's ratios to the industry average ratios

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Competing On Analytics The New Science Of Winning

Authors: Thomas H Davenport, Jeanne G Harris, Gary Loveman

1st Edition

1422103323, 9781422103326

More Books

Students also viewed these Finance questions

Question

Contrast Jungs and Freuds approaches to therapy.

Answered: 1 week ago