Problem 4.31

The following are the financial statements for Nederland Consumer Products Company for the fiscal year ended September 30, 2013.

Nederland Consumer Products Company

Income Statement for the Fiscal Year

Ended September 30, 2013

Net sales$51,407Cost of products sold

25,076Gross margin$26,331Marketing, research, administrative exp.15,746Depreciation758Operating income (loss)$9,827Interest expense477Earnings (loss) before income taxes$9,350Income taxes2,869Net earnings (loss)$6,481

Nederland Consumer Products Company

Balance Sheet as of September 30, 2013Assets:Liabilities and Equity:Cash and marketable securities$5,469Accounts payable$3,617Investment securities423Accrued and other liabilities7,689Accounts receivable4,062Taxes payable2,554Total inventories4,400Debt due within one year8,287Deferred income taxes958Prepaid expenses & other receivables1,803Total current assets$17,115Total current liabilities$22,147Property, plant, and equipment, at cost

25,304Long-term debt12,554Less: Accumulated depreciation11,196Deferred income taxes2,261Net property, plant, and equipment

$14,108Other non-current liabilities2,808Net goodwill & other intangible assets23,900Total liabilities$39,770Other non current assets

1,925Convertible Class A preferred stock1,526Common stock2,141Retained earnings13,611Total stockholders' equity (deficit)$17,278Total assets$57,048Total liabilities and equity$57,048

Calculate all the ratios, for which industry figures are available below, for Nederland and compare the firm's ratios with the industry ratios.(Round current ratio, quick ratio, debt ratio, long term debt ratio answers to 2 decimal places, e.g. 15.25 and other answers to 1 decimal place, e.g.15.5 or 15.5%.)

Industry AverageRatioCurrent Ratio2.05

timesQuick Ratio0.78

timesGross margin23.9%

%Net profit margin12.3%

%Debt ratio0.23

timesLong-term debt to equity0.98

timesInterest coverage5.62

ROA5.3%

%ROE18.8%

%

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Problem 4.33

The following are the financial statements for Nederland Consumer Products Company for the fiscal year ended September 30, 2013.

Nederland Consumer Products Company

Income Statement for the Fiscal Year

Ended September 30, 2013Net sales$51,407Cost of products sold

25,076Gross margin

$26,331Marketing, research, administrative exp.15,746Depreciation758Operating income (loss)$9,827Interest expense477Earnings (loss) before income taxes

9,350Income taxes2,869Net earnings (loss)$6,481

Nederland Consumer Products Company

Balance Sheet as of September 30, 2013Assets:Liabilities and Equity:Cash and marketable securities$5,469Accounts payable$3,617Investment securities423Accrued and others liabilities7,689Accounts receivable4,062Taxes payable2,554Total inventories4,400Debt due within one year8,287Deferred income taxes958Prepaid expenses & other receivables1,803Total current assets$17,115Total current liabilities22,147Property, plant, and equipment, at cost

25,304Long-term debt12,554Less: Accumulated depreciation11,196Deferred income taxes2,261Net property, plant, and equipment

$14,108Other non-current liabilities2,808Net goodwill and other intangible assets

23,900Total liabilities$39,770Other noncurrent assets

1,925Convertible Class A preferred stock1,526Common stock2,141Retained earnings13,611Total stockholders' equity (deficit)$17,278Total assets$57,048Total liabilities and equity$57,048

Using the DuPont identity, calculate the return on equity for Nederland, after calculating the ratios that make up the DuPont identity.(Round your answers to 2 decimal places, e.g.12.50 or 12.50%.)

Profit margin

%Total assets turnover ratio

Equity multiplier

Return on assets

%Return on equity

%

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Problem 4.35

Recreational Supplies Co. has net sales of $11,655,000, an ROE of 17.64 percent, and a total asset turnover of 2.89 times. If the firm has a debt-to-equity ratio of 1.43, what is the company's net income?(Round intermediate calculations to 2 decimals, e.g. 12.25 and final answer to 2 decimal places , e.g. 12.25.)

The company's net income$

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Problem 4.37

Modern Appliances Corporation has reported its financial results for the year ended December 31, 2013.

Modern Appliances Corporation

Income Statement for the Fiscal

Year Ended December 31, 2013Net sales$5,398,412,000Cost of goods sold3,432,925,255Gross profit

$1,965,486,745Selling, general, and administrative expenses1,036,311,231Depreciation299,928,155Operating income$629,247,359Interest expense35,826,000EBT$593,421,359Income taxes163,104,554Net earnings$430,316,805

Modern Appliances Corporation

Balance Sheet as of December 31, 2013Assets:Liabilities and Equity:Cash and cash equivalents$514,412,159Short-term borrowings$117,109,865Accounts receivable1,046,612,233Trade accounts payable466,937,985Inventories981,870,990Other current liabilities994,289,383Other Current Assets313,621,610Total current assets$2,856,516,992Total current liabilities$1,578,337,233Net Fixed Assets754,660,275Long-term debt1,200,691,565Goodwill118,407,710Common stock397,407,352Other Assets665,058,761Retained earnings1,218,207,588Total assets$4,394,643,738Total liabilities and equity$4,394,643,738

Using the information from the financial statements, complete a comprehensive ratio analysis for Modern Appliances Corporation.(Round your answers to 2 decimal places , e.g.12.25 or 12.25%. Use 365 days for calculation.)

Liquidity RatiosCurrent Ratio

timesQuick Ratio

timesEfficiency RatiosInventory turnover ratio

timesAccounts receivables turnover

timesDSO

daysAsset Turnover RatiosTotal asset turnover

timesFixed assets turnover

timesLeverage RatiosTotal debt ratio

Debt to equity ratio

Equity multiplier

Coverage RatiosTimes interest earned

timesCash coverage

timesProfitability RatiosGross Profit Margin

%Net Profit Margin

%ROA

%ROE

%Du Point identityROE

%

roblem 4.39

The TBI Company has a number of days of inventory of 50. Therefore, the TBI Company's inventory turnover is closest to:

7.3 times.

8.4 times.

9.6 times.

4.8 times.

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Problem 4.41

If a company's net profit margin is -5 percent, its total asset turnover is 1.5 times, and its financial leverage ratio is 1.2 times, its return on equity is closest to:

-7.5 percent.

-3.2 percent.

1.8 percent.

-9.0 percent.

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