Question
Problem 1 Financial ratio data is listed below for Crazy A's Horse Trailers. Construct a list of strengths and weaknesses for the firm after analyzing
Problem 1
Financial ratio data is listed below for Crazy A's Horse Trailers. Construct a list of strengths and weaknesses for the firm after analyzing the ratios.
Crazy A's Horse Trailers Ratios | ||||
Ratio | Industry | 2016 | 2015 | 2014 |
Current | 1.20x | 1.18x | 1.20x | 1.35x |
Quick | 0.20x | 0.18x | 0.21x | 0.26x |
Average Collection Period | 4 days | 9 days | 8 days | 6 days |
Days Inventory Held | 75 days | 106 days | 99 days | 90 days |
Fixed Asset Turnover | 11.30x | 8.84x | 8.89x | 8.95x |
Total Asset Turnover | 2.50x | 2.20x | 2.27x | 2.42x |
Debt to Equity | 3.50x | 3.65x | 3.17x | 2.35x |
Times Interest Earned | 2.40x | 1.72x | 2.00x | 2.23x |
Gross Profit Margin | 23.10% | 21.21% | 22.39% | 23.52% |
Operating Profit Margin | 2.00% | 3.05% | 2.86% | 2.52% |
Net Profit Margin | 1.10% | 0.89% | 1.00% | 0.97% |
Return on Investment | 2.75% | 1.97% | 2.28% | 2.35% |
Problem 2
Use the following selected financial information for Casco Corporation to compute the ratios we used in class. If information needed to calculate a certain ratio is not given, disregard that ratio. Analysis/comments are not required on this problem.
Casco Corporation
Balance Sheet
December 31, 2016
(in thousands)
Assets Liabilities and stockholders' equity
Current assets Current liabilities
Cash 200 Accounts payable 3,600
Short-term investments 1,000 Accrued liabilities 2,500
Accounts receivable 5,200 Total current liabilities 6,100
Inventory 5,700 Deferred income taxes 2,000
Other current assets 800 Long-term debt 8,200
Total current assets 12,900 Total liabilities 16,300
Long-term assets Stockholders' equity
Net PPE 6,500 Common stock and PIC 11,000
Goodwill 13,000 Retained earnings 5,100
Total stockholders' equity 16,100
Total assets 32,400 Total liabilities and equity 32,400
Casco Corporation
Income Statement
For the Year Ended December 31, 2016
(in thousands)
Net sales $34,500
Cost of goods sold 24,800
Gross profit $ 9,700
Operating expenses 7,400
Operating profit $ 2,300
Interest expense 800
Earnings before taxes $ 1,500
Income tax expense 400
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