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College of Business Principles of Financial Management (0503300) Mini Cases Financial statement analysis The financial statements of Zach Industries for the year ended December 31, 2012, follow. 1. Zachi Industries Income Statement for the Year Ended December 31, 2012 Salcs coveauc $160,000 Less: Cost of goods sold' 106,000 Gross profits S. 54.000 Less: Operating expenses Selling expense $ 16,000 General and administrative expeases 10,000 1,000 Lease expense Depreciation expense Total operating expense Operating profits Less: Interest expense Net profits before taxes Less: Taxes Net profits after taxes 10.000 $ 32,000 $ 17,000 6.100. $ 10,900 4.360 6:540 7 College of Business Principles of Financial Management (0503300) Zach ladustries Balance Sheet December 31, 2012 Assets Cash Marketable securities Accounts receivable Inventories Toral current assets Land- Buildings and equipment Less: Accumulated depreciation Net fixed assets Total assets $ 300 1,000 25,000 45.500 $ 72,000 $ 26,000 90,000 38.000 $ 78,000 $150.000 Liabilities and Stockholders' Equity Accounts payable Notes payable Tutal current liabilities Long-term debt Common stock Retained earnings Total liabilities and stockholdets' equity $ 22,000 47.000 $ 69,000 22,950 31,500 26.550 $150.000 "The firm's 3,000 outstanding shares of common stock closed 2012 at a price of 525 per' share. 2. Use the preceding financial statements to complete the following table. Assume the industry averages given in the table are applicable for both 2011 and 2012. Ratio Industry average Actual.2011. Actual 2012 Current.catio 1.80 1.84 Quick ratio *0.20 0.78 Laventor turnover" 2.50 2.59 Average collection periodo 37.5 days 36.5 days Debt ratio 65%. 67% Times interest.carried ratio 3.8 4.0 Gross profit margini 39% 40% Net profit spargin: 3.6% Return on total assets 4,0% 4.0% Return on common equity 9.5% 3.0% Market/book.catio. 1:1 1.2 "Based on a 365-day year and on end-of-year figures. 8 yze Zach Industries' financial condition as it is related to (1) Liquidity, ctivity, (3) debt, (4) profitability, and (5) market. Summarize the company's Il financial condition