Please find attached a multi-year Income Statement (Appendix A1) and multi-year Balance Sheet (Appendix A2) for Good Dog Pet Food. This company is a (fictional) pet food retailer that brought on a new CEO in Jan 1, 2015. You have been asked to assess whether or not Good Dog is doing well under the new CEO. Your job is to calculate and interpret important financial ratios and to make comments on how things have changed since the new CEO came on board and how the company compares to peers in the industry. Appendix A3 contains industry average information which you should find useful.

For the ROA and ROE, you should use the average total assets and the average total equity in your calculations. (The average is the total across two years divided by two). Calculate these values for each of 2014, 2015 and 2016. Interpret your calculations: what does this information mean? How is the company doing under the new CEO? (You should compare things before and after the CEO came on board). How is the company doing relative to the industry?

Please use the information in Appendix A1 to A3 to calculate the following ratios:

1. Current ratio
2. Account Receivable ratio (or days receivable)
3. Accounts Payable ratio (or days payable)
4. Debt ratio
5. Gross Profit margin
6. Operating Profit margin
7. Net Profit margin
8. Return on Assets
9. Return on Equity

Appendix A1: Good Dog Pet Food Comparative Income Statement ($M) For the Years Ended Dec 31, 2013 to 2016 2013 2014 2015 2016 Sales $ 57.43 $ 59.89 $145.09 $158.67 Cost of Goods Sold $ 41.94 $42.09 $101.38 $111.91 Gross Profit $15.49 $ 17.80 $ 43.71 $ 46.76 Seling and Administration $ 11.47 $ 12.01 $ 20.83 $ 25.11 Depreciation $ 1.51 $ 2.71 $ 4.31 $ 4.18 Operating Profit $ 2.52 $ 3.08 $ 18.57 $ 17.48 Interest $ 1.88 $ 2.51 $ 7.10 $ 4.93 Earnings Before Taxes $ 0.63 $ 0.57 $ 11.47 $ 12.54 Taxes $ 0.20 $ 0.18 $ 3.67 $ 4.01 Net Income $ 0.43 $ 0.39 $ 7.80 $ 8.53 Appendix A2: Good Dog Pet Food Comparative Balance Sheet ($M) For the Years Ended Dec 31, 2013 to 2016 2013 2014 2015 2016 Cash $ 2.15 $ 4.11 $ 5.16 $ 7.71 A/R $ 9.00 $ 9.71 $ 16.98 $ 17.08 Inventory $ 3.42 $ 15.93 $ 16.54 $ 15.86 Total Current Assets $ 14.58 $ 29.75 $ 38.67 $ 40.65 Land, Plant and Equipment $ 10.86 $ 32.46 $ 36.84 $ 35.60 Other Assets $ 0.49 $ 108 $ 1.68 $ 1.76 Total Assets $ 25.94 $ 63.29 $ 77.18 $ 78.01 A/P $ 10.75 S 18.15 $ 22.43 Current Portion of LT Debt $ 0.58 $ 3.62 $ 3.75 Total Current Liabilities $ 11.33 $ 21.76 $ 26.18 Long-term Debt $ 10.56 $ 37.09 $ 38.77 Total Liabilities $ 21.89 $ 58.85 $ 64.95 Shareholders' Equity $ 4.04 $ 4.43 $ 12.23 Total Liabilities and Equities $25.94 $ 63.29 $ 77.18 $ 21.99 $ 2.86 $ 24.86 $ 32.40 $ 57.25 $ 20.76 $ 78.01 Good Dog Pet Food Appendix A3: Industry Averages 2016 1.35 0.25 40.12 50.1 15.35 Current Ratio Cash Ratio Inventory Turnover (days) A/R Turnover (days) A/P Turnover (days) Cash Conversion Cycle Fixed Assets Turnover Total Assets Turnover Debt Ratio Times Interest Earned Gross Profit Margin Operating Profit Margin Net Profit Margin Return on Assets Return on Equity 1.75 0.5 10.5 28.00% 12.00% 7.50% 15.50% 37.50%