Answered step by step
Verified Expert Solution
Question
1 Approved Answer
please provide all parts and select from higher than, lower than, equal to. Joseph Berlo is a loan officer with the First Bank of Tennessee.
please provide all parts and select from higher than, lower than, equal to.
Joseph Berlo 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. Sales Red Brick Income Statement (for the period ending December 12/31/20x1) $240,000,000 Cost of goods sold 125,000,000 Administrative expenses 35,000,000 Operating income $ 80,000,000 Interest expense 12,000,000 200,000 Net income $ 67,800,000 Red Brick Balance Sheet as of 12/31/2002 Liabilities and Stockholders Assets $ 800.000 Accounts receivable 28,000,000 Inventory 79,100,000 Plant and equipment 136,000,000 $243,900,000 wordt his year, Accounts payable Notes par Long-term cebt Stochoduity $32,000,000 13,000,000 41,000,000 157,000,000 $ 243,900,000 Current ratio Quick ratio Inventory tumover Average collection period Debt ratio (debt total assets) Times interest-earned Return on equity Return on assets Company's Ratios Industry (Previous Year) Average 22:1 2.4:1 0.611 0.711 5.3 4.7 29 days 5 days 30% 36% 6.7 3.6 48.7% 13.9% 310 10.3% Company's Ratios Industry (Previous Year) Average Ourrent ratio 2.2:1 2.4:1 Quick ratio 0.6:1 0.7:1 Inventory turnover 5.3x 4.7% Average collection period 29 days 55 days Debt ratio (debt/total assets) 30% 36% Times-interest-earned 6.7 3.6 Return on equity 48.7% 13.9% Return on assets 31.0% 10.3% Operating profit margin 25.5% 15.15 Net profit margin 21.79 8.9% 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 we the ratio in the previous year. Quick ratio of times ist the industry average and the ratio in the previous year Inventory tumover ratio of the industry average and the ratio in the previous year. Average collection period of days is the industry average and the ratio in the previous year Debt ratio of the industry average and select the ratio in the previous year Times-interest-earned ratio of the industry average and the ratio in the previous year Retum on equity ratio of the industry average and the ratio in the previous year Return on assets ratio of the industry average and the ratio in the previous year Operating profit margin ratio of the industry average and the ratio in the previous year Net profit margin ratio of the industry average and the in the previous year Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started