Ratio analysis. The Corrigan Corporation's 2004 and 2005 financial statements follow, along with some industry average ratios. A.Assess Corrigan's liquidity position, and determine how it compares with peers and how the liquidity position has changed over time. B.Assess Corrigan's asset management position, and determine how it compares with peers and how its asset management efficiency has changed over time. C.Assess Corrigan's debit management position, and determine how it compares with peers and how its debt management has changed over time

D.Asses Corrigan's profitability ratios, and determine how they compare with peers and how the profitability position has changed over time. E.Assess Corrigan's market value ratios, and determine how their valuation compares with peers and how it has changed over time. F.Calculate Corrigan's ROE, as well as the industry average ROE, using the extended Du Pont Equation. From this analysis, how does Corrigan's financial position compare with the industry average numbers? G.What do you think would happen to its ratios if the company initiated cost-cutting measures that allowed it to hold lower levels of inventory and substantially decreased the cost goods sold? No calculations are necessary. Think about which ratios would be affected by changes in these two accounts.

Corrigan Corporation: Balance Sheets as of December 31 2005 2004 Cash $72,00 $65,00 Accounts receivable 439,000 328,000 Inventories 894,000 813,000 Total current assets $1,405,000 $1,206,000 Land and building 238,000 271,000 Machinery 132,000 133,000 Other fixed assets 61,000 57,000 Total assets $1,836,000 $1,667,000 Accounts and notes payable 432,000 409,500 Accrued liabilities 170,000 162,000 Total current liabilities $602,000 $571,500 Long-term debt 404,290 258,898 Common stock 575,000 575,000 Retained earnings 254,710 261,602 Total liabilities and equity $1,836,000 $1,667,000

Corrigan Corporation: Income Statements for year ending December 31

2005 2004 Sales $4,240,000 $3,635,000 Cost of goods sold 3,680,000 2,980,000 Gross operating profit $560,000 $655,000 General administrative and selling expenses 236,320 213,550 Depreciation 159,000 154,500 Miscellaneous 134,000 127,000 Earnings before taxes (EBT) 30,680 159,950 Taxes (40%) 12,272 63,980 Net income 18,408 95,970

Per share data 2005 2004 EPS $0.80 $4.17 Cash dividends $1.10 $0.95 Market price (average) $12.34 $23.57 P/E ratio 15.4x 5.65x Number of shares outstanding 23,000 23,000

Industry financial ratios* 2.7x Inventory turnover* 7.0x Days sales outstanding* 32 days Fixed assets turnover* 13.0x Total assets turnover* 2.6x Return on assets 9.1% Return on equity 18.2% Debt ratio 50.0% Profit margin on sales 3.5% P/E ratio 6.0x Price/cash flow ratio 3.5x

*(industry financial ratio)-Industry average ratios have been constant for the past 4 years *(Inventory turnover, fixed assets turnover and total assets turnover)-based on year-end balance sheet figures *(Days sales outstanding)- Calculation is based on a 365-day year