Potential Acquisition

Your company is considering acquiring a private company (New Co., Inc.). The CFO has asked you to review the financial statements, look for key trends, and develop financial/operational questions to ask the management of New Co. when you meet next week. Calculate average collection period, total asset turnover, inventory turnover, and days in inventory.

1. Help Calculate average collection period, total asset turnover, inventory turnover, and days in inventory for the four years.
2. Assess the trends in activity of the firm, using your calculations in part 1, over the four year period.Help Calculate the gross profit margin, operating margin, and net profit margin.
3. Assess the profitability trends of the firm, using your calculations in part 3, over the four- year period.
4. Develop three or four questions to ask the management of New Co. to help your management team understand trends uncovered by the ratio analysis.

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