Problem 15: Compute the financial ratios for Eastnorth Manufacturing's Industry. Using Eastnorth's ratios from Problem 12, graph the firm's and industry as we have done in this chapter. Analyze Eastnorth's performance in comparison to its industry.
The ratios that we discussed in this chapter are ratio analysis of balance sheet and income statement, financial ratio, liquidity ratios, asset management ratios, financial leverage ratios, profitability ratios, and market value ratios. I have listed below the Eastnorth firm's ratios from problem 12 to help compare to the industry ratios.The years are incorrect but the data is correct. See scanned copy with written answers below for problem 12.
Any information would be helpful. Thank you!
| Industry | 2017 | 2016 | 2015 |
| Assets | | | |
| Cash and Marketable securities | $30,000 | $25,000 | $20,000 |
| Accounts receivable | 110,000 | 90,000 | 60,000 |
| Inventories | 100,000 | 80,000 | 80,000 |
| Total current assets | 240,000 | 195,000 | 160,000 |
| Gross plant and equipment | 250,000 | 220,000 | 200,000 |
| Less: accumulated depreciation | -100,000 | -65,000 | -50,000 |
| Net plant and equipment | 150,000 | 155,000 | 150,000 |
| Land | 50,000 | 50,000 | 50,000 |
| Total fixed assets | 200,000 | 205,000 | 200,000 |
| Total assets | 440,000 | 400,000 | 360,000 |
| Liabilities and Equity | | | |
| Accounts payable | $58,000 | $50,000 | $45,000 |
| Notes payable | 50,000 | 50,000 | 50,000 |
| Accrued liabilities | 0 | 0 | 0 |
| Total current liabilities | 108,000 | 100,000 | 95,000 |
| Long-term debt | 32,000 | 20,000 | 15,000 |
| Total liabilities | 140,000 | 120,000 | 110,000 |
| Total stockholders equity | 300,000 | 280,000 | 250,000 |
| Total liabilities and equity | 440,000 | 400,000 | 360,000 |
| Year Ended December 31 | 2017 | 2016 | 2015 |
| Net revenue or sales | $1,100,000 | $1,000,000 | $900,000 |
| Cost of goods sold | 700,000 | 650,000 | 600,000 |
| Gross profit | 400,000 | 350,000 | 300,000 |
| Operating expenses: | | | |
| General and administrative | 143,000 | 135,000 | 130,000 |
| Selling and marketing | 88,000 | 80,000 | 70,000 |
| Depreciation | 44,000 | 40,000 | 36,000 |
| Operating income | 125,000 | 95,000 | 64,000 |
| Interest | 15,000 | 15,000 | 14,000 |
| Income before taxes | 110,000 | 80,000 | 50,000 |
| Income taxes (40%) | 44,000 | 32,000 | 20,000 |
| Net income | $66,000 | $48,000 | $30,000 |
DECEMBER 3 Long-term debt 2015 2014 2013 140,000 100,000 71,000 Total liabilities $282,000 $200,000 $164,000 Common stock ($1 par, 50,000 shares) Paid-in capital Retained earnings Total stockholders' equity Total liabilities and equity $50,000 $50,000 $50,000 100,000 100,000 100,000 68,000 50,000 38,000 218,000 200,000 188,000 $500,000 $400,000 $352,000 2015 YEARS ENDED DECEMBER 31 2014 2013 Net revenues or sales $700,000 $600,000 $540,000 Cost of goods sold Gross profit Operating expenses: 450,000 375,000 338,000 250,000 225,000 202,000 General and administrative 95,000 95,000 95,000 Selling and marketing Depreciation Operating income 56,000 50,000 45,000 20,000 25,000 15,000 74,000 60,000 47,000 Interest 14,000 7,000 10,000 Income before taxes 60,000 50,000 40,000 Income taxes (40%) 20,000 $30,000 16,000 24,000 $36,000 $24,000 Net income Number of shares outstanding Earnings per share 50,000 50,000 50,000 $0.72 $0.48 $0.60 1 ANSuwry: 2015 2o14 opesa ting profit lintome Sales opereting prgit magin 47 00 0 60,00 0 7000 So 540 00 0 600, 000 8.70y 10.57 2 Peof't Net Propet mangin ANet Sales 30000 36 000 NP Margin 540 000 600 000 4.44y 5.14y 2 Grotoss polit prijst maxgin 3 Gseass Sales 5000 250000 GP maagin 5HO 000 600 000 T00 00 0 37.40y 37.S.% 35. 711 2 014 dols 2o13 gqai dy (RDE) Net Proit PAT) Share Capital 4) Retusun On Geirty 24000 36000 30000 RDE 1&f000 d18000 N00 000 12.76 16.5Y ISY S Return on Capaital Empleyee (ROCE) EBIT Tofal a bets-Cunnent liabities) capital Employed 47000 bo000 74000 RoCE 35a000-93000 (se 400 000-/0000 18. J4 2oY o. 6 7y. EBIT 6) Returu an ansets (RoA) GUg. to tal ahets 60 000 RoA Fu000 560,000 + 400ov0 400 000 t35db00 2 1S-95 16.44 Mols 20 13 Sales fined anetz tunnover ahet fineed anet 546 000 700 000 6 00000 200 Doo 50 000 2.7x 2.&X Debtor /Recivable tusmouer stato (ales Cash) Net Cedit Sales 2 Recivia ble aug bebtost (00 ) (s40000-1600 o(600000 - 90000 25000 o boo- fo 000 56000 9.35x 6.75x 7. 9Su CollecHon Pesu'od 365 365 365 6.75 7.as 9.35 39 days 54 90/3 Joly 2015 goods Seld Test of Creditos /Payable tuneer atio Payable 450 D0O 375 000 3 38 000 34000 O00 e1 33-& 13. 03k 37.5k poned pouins 865 365 365 13. 3 83.8 37.5 tdys todlys Han ay ment In this Case, collec tion peuod Jpeaten hegadive Hing fin the Company Peseiocl uhic s C goodls Solel aug inven tar y Lost of lo Inven tory turver Reo 4so boo 375 000 ldsooo 100 000 L00000 t f0, 000 4x 4. 9n 365 n Dnvendoxy Conversio peiod 365 1 4 4. 2 9jelays 87 Current anets 19) Current atio Curret Liabilities JOIS 2013 Jo14 2s0 000 oo 000 S2000 42 000 43 000 loo 006 763K 1.76X Curtent anets - inventory 13) Quck atio Cusisreut Lab:/i'tes ) (doo 950 000-1I500 0 O00-l00 Doo Isoo0-80000 93 000 142000 loo,000 O.774 X Jo13 Cash and manketable Seswict Cusrorent liabi li Hes O5 000 16000 93 Do0 142 000 0.17 0.17 S Debt/guity 9tatio 1,00 O 140000 1&000 218 000 Woo,000 37. 77 64.33y Total deb t Total anet-Current Capidal Employee 16 Debt to L001000 7/000 Juo 000 35d bo0-000 500000-142000 uco 000- L00000 33.33 . 39. 11 loly 1) Jnterest natio EBIT Covenage Total interest Enpense 47000 74000 60000 14000 7000 lo,000 6.7 5.99 shasre Pice PaceEnig catio Carming Per Share O.48 0.60 /67 X DECEMBER 3 Long-term debt 2015 2014 2013 140,000 100,000 71,000 Total liabilities $282,000 $200,000 $164,000 Common stock ($1 par, 50,000 shares) Paid-in capital Retained earnings Total stockholders' equity Total liabilities and equity $50,000 $50,000 $50,000 100,000 100,000 100,000 68,000 50,000 38,000 218,000 200,000 188,000 $500,000 $400,000 $352,000 2015 YEARS ENDED DECEMBER 31 2014 2013 Net revenues or sales $700,000 $600,000 $540,000 Cost of goods sold Gross profit Operating expenses: 450,000 375,000 338,000 250,000 225,000 202,000 General and administrative 95,000 95,000 95,000 Selling and marketing Depreciation Operating income 56,000 50,000 45,000 20,000 25,000 15,000 74,000 60,000 47,000 Interest 14,000 7,000 10,000 Income before taxes 60,000 50,000 40,000 Income taxes (40%) 20,000 $30,000 16,000 24,000 $36,000 $24,000 Net income Number of shares outstanding Earnings per share 50,000 50,000 50,000 $0.72 $0.48 $0.60 1 ANSuwry: 2015 2o14 opesa ting profit lintome Sales opereting prgit magin 47 00 0 60,00 0 7000 So 540 00 0 600, 000 8.70y 10.57 2 Peof't Net Propet mangin ANet Sales 30000 36 000 NP Margin 540 000 600 000 4.44y 5.14y 2 Grotoss polit prijst maxgin 3 Gseass Sales 5000 250000 GP maagin 5HO 000 600 000 T00 00 0 37.40y 37.S.% 35. 711 2 014 dols 2o13 gqai dy (RDE) Net Proit PAT) Share Capital 4) Retusun On Geirty 24000 36000 30000 RDE 1&f000 d18000 N00 000 12.76 16.5Y ISY S Return on Capaital Empleyee (ROCE) EBIT Tofal a bets-Cunnent liabities) capital Employed 47000 bo000 74000 RoCE 35a000-93000 (se 400 000-/0000 18. J4 2oY o. 6 7y. EBIT 6) Returu an ansets (RoA) GUg. to tal ahets 60 000 RoA Fu000 560,000 + 400ov0 400 000 t35db00 2 1S-95 16.44 Mols 20 13 Sales fined anetz tunnover ahet fineed anet 546 000 700 000 6 00000 200 Doo 50 000 2.7x 2.&X Debtor /Recivable tusmouer stato (ales Cash) Net Cedit Sales 2 Recivia ble aug bebtost (00 ) (s40000-1600 o(600000 - 90000 25000 o boo- fo 000 56000 9.35x 6.75x 7. 9Su CollecHon Pesu'od 365 365 365 6.75 7.as 9.35 39 days 54 90/3 Joly 2015 goods Seld Test of Creditos /Payable tuneer atio Payable 450 D0O 375 000 3 38 000 34000 O00 e1 33-& 13. 03k 37.5k poned pouins 865 365 365 13. 3 83.8 37.5 tdys todlys Han ay ment In this Case, collec tion peuod Jpeaten hegadive Hing fin the Company Peseiocl uhic s C goodls Solel aug inven tar y Lost of lo Inven tory turver Reo 4so boo 375 000 ldsooo 100 000 L00000 t f0, 000 4x 4. 9n 365 n Dnvendoxy Conversio peiod 365 1 4 4. 2 9jelays 87 Current anets 19) Current atio Curret Liabilities JOIS 2013 Jo14 2s0 000 oo 000 S2000 42 000 43 000 loo 006 763K 1.76X Curtent anets - inventory 13) Quck atio Cusisreut Lab:/i'tes ) (doo 950 000-1I500 0 O00-l00 Doo Isoo0-80000 93 000 142000 loo,000 O.774 X Jo13 Cash and manketable Seswict Cusrorent liabi li Hes O5 000 16000 93 Do0 142 000 0.17 0.17 S Debt/guity 9tatio 1,00 O 140000 1&000 218 000 Woo,000 37. 77 64.33y Total deb t Total anet-Current Capidal Employee 16 Debt to L001000 7/000 Juo 000 35d bo0-000 500000-142000 uco 000- L00000 33.33 . 39. 11 loly 1) Jnterest natio EBIT Covenage Total interest Enpense 47000 74000 60000 14000 7000 lo,000 6.7 5.99 shasre Pice PaceEnig catio Carming Per Share O.48 0.60 /67 X
