Problem 9-19 Joseph Berio is a loan officer with the first Bank of Tennessee, Red Brick, Inc, a major producer of masonry products, has applied for a short-term loan. Red Brick supplies building material throughout the southern states, with brickr plants located in Tennessee, Alabama, Georgia, and Indiana. The firm's income statement and balance sheet are given below. The third table presents both a ratio analysis of Red Brick's previous year's financial statements and the Industry averages of the ratios. Red Brick Income Statement (for the period ending December 12/31/20X1) Sales $200,000,000 Cost of goods sold 101,000,000 Administrative expenses 21,000,000 Operating income $ 86,000,000 Interest expense 6,000,000 Taxes 700,000 Net Income $ 79,300,000 Red Brick Balance Sheet as of 12/31/20X2 Assets Liabilities and Stockholders Equity Cash 700,000 Accounts payable $ 39,000,000 Accounts receivable 36,000,000 Notes payable 9,000,000 Inventory 73,200,000+ Long-term dett 45,000,000 Plant and equipment 135,000,000 Stockholders' equity 151,900,000 $244,900,000 $ 244,900,000 We werd Pre year's eye 1.700.000 Company's Ratios Industry (Previous Year) Average 90% of art on Creol Previous year's inventory 1.700.000 Company's Ratios Industry (Previous Year) Average Current ratio 2.0:1 2.2:1 Quick ratio 0.7:1 0.7:1 Inventory turnover 5.6x 4.6x Average collection period 43 days 45 days Debt ratio (debt/total assets) 31% 399 Times-interest-earned 14.3 3.9 Return on equity 59.39 14.3% Return on assets 36.2% 10.04 Operating profit margin 31.8% 15.3% Net profit margin 29.3% 9.0% To help decide whether to grant the loan, compute the following ratios and compare the results with the company's previous year ratios and industry averages. Assume there are 365 days in a year. Do not round intermediate calculations. Round your answers to two decimal places. Current ratio of times ist the industry average anderen the ratio in the previous year. Quick ratio of times ist the industry average and see the ratio in the previous year. Inventory turnover ratio of the industry average and the ratio in the previous year Average collection period of days is the industry average and vinet the ratio in the previous year Debe ratio of the industry average and the ratio in the previous year Times-interest eamed ratio of the industry average and the ratio in the previous year. Retum on equity ratio of the industry average and the ratio in the previous year Return on assets ratio of 965 the industry average and see the ratio in the previous year Operating profit margin ratio of istan the industry average and the ratio in the previous year Net profit margin ratio of Wis B the industry average and the ratio in the previous year. is Balet Problem 9-19 Joseph Berio is a loan officer with the first Bank of Tennessee, Red Brick, Inc, a major producer of masonry products, has applied for a short-term loan. Red Brick supplies building material throughout the southern states, with brickr plants located in Tennessee, Alabama, Georgia, and Indiana. The firm's income statement and balance sheet are given below. The third table presents both a ratio analysis of Red Brick's previous year's financial statements and the Industry averages of the ratios. Red Brick Income Statement (for the period ending December 12/31/20X1) Sales $200,000,000 Cost of goods sold 101,000,000 Administrative expenses 21,000,000 Operating income $ 86,000,000 Interest expense 6,000,000 Taxes 700,000 Net Income $ 79,300,000 Red Brick Balance Sheet as of 12/31/20X2 Assets Liabilities and Stockholders Equity Cash 700,000 Accounts payable $ 39,000,000 Accounts receivable 36,000,000 Notes payable 9,000,000 Inventory 73,200,000+ Long-term dett 45,000,000 Plant and equipment 135,000,000 Stockholders' equity 151,900,000 $244,900,000 $ 244,900,000 We werd Pre year's eye 1.700.000 Company's Ratios Industry (Previous Year) Average 90% of art on Creol Previous year's inventory 1.700.000 Company's Ratios Industry (Previous Year) Average Current ratio 2.0:1 2.2:1 Quick ratio 0.7:1 0.7:1 Inventory turnover 5.6x 4.6x Average collection period 43 days 45 days Debt ratio (debt/total assets) 31% 399 Times-interest-earned 14.3 3.9 Return on equity 59.39 14.3% Return on assets 36.2% 10.04 Operating profit margin 31.8% 15.3% Net profit margin 29.3% 9.0% To help decide whether to grant the loan, compute the following ratios and compare the results with the company's previous year ratios and industry averages. Assume there are 365 days in a year. Do not round intermediate calculations. Round your answers to two decimal places. Current ratio of times ist the industry average anderen the ratio in the previous year. Quick ratio of times ist the industry average and see the ratio in the previous year. Inventory turnover ratio of the industry average and the ratio in the previous year Average collection period of days is the industry average and vinet the ratio in the previous year Debe ratio of the industry average and the ratio in the previous year Times-interest eamed ratio of the industry average and the ratio in the previous year. Retum on equity ratio of the industry average and the ratio in the previous year Return on assets ratio of 965 the industry average and see the ratio in the previous year Operating profit margin ratio of istan the industry average and the ratio in the previous year Net profit margin ratio of Wis B the industry average and the ratio in the previous year. is Balet