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please answer all parts of the question 7. Analysis of Financial Statements: Tying the Ratios Together The DuPont equation shows the relationships among asset management,
please answer all parts of the question
7. Analysis of Financial Statements: Tying the Ratios Together The DuPont equation shows the relationships among asset management, debt management, and market ratios. Management can use the DuPont equation to analyze ways of improving the firm's performance. Its equation is: ROE-Profit marginx Total assets turnover x Equity multiplier Ratio analysis is important to understand and interpret financial statements; however, sound financial analysis involves more than just calculating and interpreting numbers. Quantitative factors also need to be considered. Quantitative Problem: Rosnan Industries 2019 and 2018 balance sheets and income statements are shown below. Balance Sheets: 2018 2019 $60 $45 Cash and equivalents 275 300 Accounts receivable Inventories 375 350 Total current assets $710 $ 695 2,000 1,490 Net plant and equipment Total assets $2,710 $2,185 Accounts payable $ 150 $ 85 Accruals 75 50 Notes payable 135 $ 270 Total current liabilities 110 $335 Balance Sheets: Cash and equivalents Accounts receivable Inventories Total current assets Net plant and equipment Total assets Accounts payable Accruals Notes payable Total current liabilities Long-term debt Common stock Retained earnings Total liabilities and equity Sales Operating costs excluding depreciation EBITDA Depreciation and amortization EBIT Interest EBT Taxes (25%) Net income Dividends paid Income Statements: 2018 60 $ 45 275 300 375 350 $ 710 695 2,000 1,490 $2,710 $2,185 $ 150 $ 85 75 50 110 135 $335 $ 270 450 290 1,225 1,225 700 400 $2,710 $2,185 2019 2018 $1,885 $1,425 1,250 1,000 $ 635 $ 425 100 75 $ 535 $ 350 63 46 $ 472 $ 304 118 76 $ 354 $ 228 $ 54 $ 48 2019 $ Taxes (25%) 118 76 Net income $ 354 $228 Dividends paid $ 54 $ 48 Addition to retained earnings $300 $ 180 Shares outstanding Price 100 100 $25.00 $22.50 10.00% WACC What is the firm's 2019 current ratio? Round your answer to two decimal places. The 2019 current ratio indicates that Rosnan has select current assets to meet its current obligations as they come due What is the firm's 2019 total assets turnover ratio? Round your answer to four decimal places. Given the 2019 current and total assets turnover ratios calculated above, if Rosnan's 2019 quick ratio is 1.0 then an analyst might conclude that Rosnan's fixed assets are managed -Select- What is the firm's 2019 debt-to-capital ratio? Round your answer to two decimal places. If the industry average debt-to-capital ratio is 30%, then Rosnan's creditors have a select cushion than indicated by the industry average. What is the firm's 2019 profit margin? Round your answer to two decimal places. If the industry average profit margin is 12%, then Rosnan's lower than average debt-to-capital ratio might be one reason for its high profit margin. Sed What is the firm's 2019 price/earnings ratio? Round your answer to two decimal places. Price WACC $25.00 $22.50 10.00% What is the firm's 2019 current ratio? Round your answer to two decimal places. The 2019 current ratio indicates that Rosnan has Select current assets to meet its current obligations as they come due. What is the firm's 2019 total assets turnover ratio? Round your answer to four decimal places. Given the 2019 current and total assets turnover ratios calculated above, if Rosnan's 2019 quick ratio is 1.0 then an analyst might conclude that Rosnan's fixed an -Select- What is the firm's 2019 debt-to-capital ratio? Round your answer to two decimal places. If the industry average debt-to-capital ratio is 30%, then Rosnan's creditors have a (-Select- cushion than indicated by the industry average. What is the firm's 2019 profit margin? Round your answer to two decimal places. If the industry average profit margin is 12%, then Rosnan's lower than average debt-to-capital ratio might be one reason for its high profit margin. -Select- What is the firm's 2019 price/earnings ratio? Round your answer to two decimal places. Using the DuPont equation, what is the firm's 2019 ROE? Round your answer to two decimal places Step by Step Solution
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