PRINCE MOHAMMAD BIN FAHD UNIVERSITY FINA 3311 - Financial Management Principles Revision - Chapter 4 1. The last two years of financial statements for Pamplin, Inc., are as follows Pamplin, Inc. Balance Sheets, December 31, 2015 and 2016 (Sthousands) 2015 2016 Cash $ 200 $ 150 Accounts receivable 450 425 Inventory 550 625 Total current assets $1,200 $ 1,200 Gross plant and equipment $ 2.200 $ 2,600 Less: Accumulated (1.000) (1,200 depreciation Net plant and equipment $ 1,200 $1,400 Total assets $ 2,400 $ 2,600 2015 2016 $ 200 0 $ 200 $ 600 $800 $ 150 150 S 300 $ 600 $900 Accounts payable Notes payable-current (9% interest) Total current liabilities Bonds (8.33% interest) Total liabilities Common stockholders' equity Common stock Paid-in capital Retained earnings Total stockholders' equity Total liabilities and stockholders' equity $ 300 600 700 $1,600 $2,400 $ 300 600 800 $1.700 $2,600 Pamplin, Inc. Income Statements for the Years Ended December 31, 2015 and 2016 2015 2016 Sales (all credit) $1,200 $1,450 Cost of goods sold 700 850 Gross profit $ 500 $ 600 Operating expenses (cash) $ 30 $ 40 Depreciation expense 220 200 Total operating expense $ 250 $ 240 Net operating income $ 250 $360 Interest expense 50 64 Earnings before taxes S 200 296 Income taxes (40%) 80 118 Net income $ 120 $ 178 a. Using the financial statements for Pamplin Inc., Compute the following ratios for 2016 Answer Ratio Acid-test ratio Average collection period Inventory turnover Debt ratio Total Assets Turnover Return on equity Operating profit margin Peer-group 3 x 90 days 2.20 33% 0.75 x 9% 20% b. Compare the calculated ratios to the peer-group ratios listed above and assess the firm's financial condition. 2. Greene, Inc.'s balance sheet indicates that the book value of the stockholders' equity is $750,500. The firm's earnings per share are $3, which produces a price - earnings ratio of 12.25. If there are 50,000 shares of common stock outstanding, what is the firm's market-to-book ratio? 3. Last year triangular resources earned $5 million in net operating income and had an operating profit margin of 20 percent. If the firm's total asset turnover ratio was 1.5, what was the firm's investment in total assets