Q1. Calculate the 2011 current and quick ratio based on the projected balance sheet and income statement data.

Q2. What can you say about the company's liquidity position in 2009, 2010, and projected in 2011?

Q3: Calculate the 2011 inventory turnover, days sales outstanding, fixed assets turnover and total assets turnover. How does Computron's utilization of assets stack up against other firms?

Q4: Calculate the 2011, debt, times interest earned and EBITDA coverage ratios. How does Computron compare with industry with respect to financial leverage and what can you conclude from the ratio?

Fundamental Concepts of Corporate Finance n of Computron lo rather than the po Case yut the finis The first part of the case, presented in Chapter 2, discussed the situation of o put dustries after an expansion program. A large loss occurred in 2010, rather l profit. As a result, its managers are directors, and investors are concerned about Donna Jamison was brought in as assistant to in assistant to Fred Campo, Computron's chai had the back of getting the company back into a sound financial position. Com 2010 balance sheets and income statements, together with projections for 201 2 in the following tables. The tables also show the 2009 and 2010 financial ratios dastry average data. The 2011 projected financial statement data represent Campo's best guess for 2011 results, assuming that some new financing is arranged company over the hump." n's chairman, who Computron's 2009 2011, are shown ratios, along with is nt Jamison's and ranged to get the Balance Sheets 2010 2011E 2009 Assets Cash Short-term investments Accounts receivable Inventories Total current assets Gross fixed assets Less: Accumulated depreciation Net fixed assets Tocal assets $ 9,000 48,600 351,200 715,200 S1,124,000 491,000 146,200 S 344,800 S1,468.800 S 7.282 20,000 632,160 1.287,360 $1,946,802 1,202,950 263.160 S 939,790 S2.886,592 S 14,000 71,632 878,000 1,716,480 S2,680,112 1,220,000 383.160 S 836,840 $3,516,952 Liabilities and Equity Accounts payable S 145,600 S 324 Notes payable 200,000 720 Accruals 136,000 284,960 Total current liabilities $ 481,600 $1,328,960 Long-term debe 323,432 1,000,000 Common stock (100,000 shares) 460,000 Retained earnings 460,000 203,768 Totalcquity 97,632 Total liabilities and equity $ 663,768 S 557,632 $1,468.800 S2.886,592 Note: "E' denotes "estimated"; the 2011 data are forecasts. S 359,800 300,000 380,000 $1,039,800 500,000 1,680,936 296,216 $1.977,152 $3,516,952 Jamison must prepare an analysis of where the company is now, what it must do to financial health, and what actions should be taken. Your assim following questions. Provide clear cm it must do to regain its Chapter 3: Analysis of Financial Statements 119 Income Statements Sales Cost of goods sold Other expenses Depreciation Total operating costs EBIT Interest expense Taxes (40%) Net income 2009 $3,432,000 2,864,000 340,000 18.000 $3,222.900 S209,100 62.500 S 146.600 58,610 S 87,960 2010 S5,834.400 4,980,000 720,000 116,960 $5,816,960 S 17.410 176,000 (S 158,560) (63,424) (S 95,136 2011E $7,035,600 5,800,000 612,960 120,000 $6,532.960 S502.640 80.000 S422.640 169,056 S 253,584 S $ Other Data Stock price Shares outstanding EPS DPS Tax rate Book value per share Lease payments S $ $ 8.50 100,000 0.880 0.220 40% 6,638 40,000 $ 6.00 100,000 (S 0.951) 0.110 40% S 5.576 S40,000 12.17 250.000 1.014 0.220 40% 7.909 40,000 S $ S $ Note: "E" denotes "estimated"; the 2011 data are forecasts. Ratio Analysis Industry Average 2010 2011E 2009 2.3 0.8 1.0 4.8 1.5 0.5 4.5 39.6 6.2 6.1 32.0 7.0 37.3 10.0 2.3 54.8% 2.0 2.5 Current Quick Inventory turnover Days sales outstanding Fixed assets turnover Total assets turnover Debt ratio TIE EBITDA coverage Profit margin Basic earning power ROA ROE Price/Earnings (P/E) Price/Cash flow Market/Book 2.6 2.6% 14.2% 6.0% 13.3% 80.7% 0.1 0.8 -1.6% 0.6% -3.3% -17.1% 50.0% 6.2 8.0 3.6% 17.8% 9.0% 17.9% 16.2 7.6 9.7 -6,3 8.0 27.5 1.1 1.3