Requirement 1. Perform a trend analysis on Treble's sales revenue, inventory, and receivables over the past three years, using 2015 as the base. Is the trend in each of these areas favorable or unfavorable for the company? Begin by calculating the trend analysis. (Round the ratios to the nearest whole percent, X%.) 2016 2018 2017 2015 Net sales revenue % % Inventory % Accounts receivable, net % % % % Is the trend in each of these areas favorable or unfavorable for the company? The trend percentage (2) The trend percentages for sales revenue is (1) in inventory indicates a The trend percentage (4) (3) in net receivables is (5) than the increase in sales, which is trend (6). Requirement 2. Using the industry averages as benchmarks, analyze Treble's performance over the past three years in the following areas: a) liquidity, b) turnover, c) overall debt payment ability, and d) profitability. a. Start by analyzing the liquidity ratios: the current ratio and the quick ratio. Select the formula and enter the amounts to calculate the current ratios for the years 2016 through 2018. (Round the ratios to two decimal places X.XX.) (7) (8) Current ratio 2018 2017 2016 Next, select the formula and enter the amounts to calculate the quick (acid-test) ratios for the years 2016 through 2018. (Abbreviations used: Cash* =cash and cash equivalents, SE = stockholders' equity, and ST short-term. Round the ratios to two decimal places, X.XX.) (9) (10) (11) (12) Quick ratio + 2018 2017 II + 2016 Print + b. Analyze the turnover ratios: inventory turnover and days' inventory outstanding, accounts receivable turnover, days' sales outstanding, accounts payable turnover, days' payables outstanding, and cash conversion cycle. Select the formula and enter the amounts to calculate the inventory turnover for the years 2016 through 2018. (Round the ratios to two decimal places, X.XX.) (13) (14) Inventory turnover 2018 2017 2016 Select the formula and enter the amounts to calculate days' inventory outanding (DIO) for the years 2016 through 2018. (Enter formula ratios to two decimal places, X.XX. Use a 365-day year. Round the DIO to one decimal place, X.X.) (15) (16) Days' inventory outstanding (DIO) 2018 2017 2016 Select the formula and enter the amounts to calculate the accounts receivable turnover for the years 2016 through 2018. (Round the ratios to two decimal places, X.XX.) (17) (18) Accounts receivable turnover 2018 2017 2016 Select the formula and enter the amounts to calculate days' sales outanding (DSO) for the years 2016 through 2018. (Use a 365-day year. Round the DSO to one decimal place, X.X.) (20) (19) Days' sales outstanding (DSO) 2018 2017 2016 Select the formula and enter the amounts to calculate the accounts payable turnover for the years 2016 through 2018. (Round the ratios to two II II II decimal places, X.XX.) Print (21) (22) Accounts payable turnover 2018 2017 2016 Select the formula and enter the amounts to calculate days' payables outanding (DPO) for the years 2016 through 2018. (Use a 365-day year. Round the DPO to one decimal place, X.X.) (23) (24) Days' payables outstanding (DPO) 2018 2017 2016 Select the formula and enter the amounts to calculate the cash conversion cycle (in days) for the years 2016 through 2018. (Enter all amounts to one decimal place, X.X.) (25) (26) (27) Cash conversion cycle 2018 + 2017 + 2016 c. Analyze the ability to pay long-term debt: debt ratio and times-interest-earned ratio. Select the formula and enter the amounts to calculate the debt ratios for the years 2016 through 2018. (Enter the ratios in decimal form [not as percentages] to two decimal places, X.XX.) (28) (29) Debt ratio 2018 2017 2016 Select the formula and enter the amounts to calculate the times-interest-earned ratios for the years 2016 through 2018. (Round the ratios to one decimal place, X.X.) (30) (31) Times-interest-earned ratio 2018 II I II 2017 Print 2016 d. Analyze the profitability ratios: gross margin percentage and operating income percentage. Select the formula and enter the amounts to calculate the gross margin (gross profit) percentages for the years 2016 through 2018. (Round the ratios to one tenth of a percent, X.X%.) (32) (33) Gross margin % 2018 % 2017 2016 % Select the formula and enter the amounts to calculate the operating income percentage percentages for the years 2016 through 2018. (Round the ratios to one-tenth of a percent, X.X%.) (34) (35) Operating income % 2018 % 2017 % 2016 0% Now, using the industry averages as benchmarks, analyze Treble's performance over the past three years Overall, Treble's performance over the past three years looks (36). and (37) compare favorably to the industry over the three years. averages. Most all the ratios showed (38) Treble's performance over the past three years are due to: (Select all that apply.) A. Declining earnings B. Buildup of inventories C. Improved interest coverage D. Decreasing gross margin E. Increasing debt ratio F. Increasing long-term liabilities G. Decreased cash flow H. Payment of accounts payable is getting faster IL Operating income percentages are decreasing Inability to collect accounts receivable J. K. Improved accounts receivable turnover Requirement 3. Evaluate Treble's quality of earnings. Are there any red flags in your analysis? Explain First, select the formula and enter the amounts to calculate the net income percentage ratios for years 2016 through 2018. (Round the ratios to one-tenth percent, X.X%.) (39) (40) Net income % 2018 % 2017 2016 Refer to the quality of earnings ratios you calculated in Requirements 2 and 3 and evaluate Treble's quality of earnings. Are there any red flags in your analysis? Explain All the ratios are (41) Quality of earnings is (42). I II 1: Data Table Selected balance sheet data 2017 2016 2015 2018 Cash 2,900 $ 3,400 $ 3,900 Marketable securities 1,300 1,500 1,300 4,700$ Accounts receivable, net 6,900 3,600 6,600 Inventory 6,200 4,100 2,300 1,900 Total current assets 17,300 15,600 12,200 Long-term assets 9,300 7,100 8,300 Total assets 23,900 24,400 21,500 Accounts payable 1,600 2,300 3,100 2,000 Short-term notes payable 7,500 7,000 6,300 Total current liabilities 8,300 10,500 6,300 Total long-term liabilities 410 2,600 7,219 2: Data Table Selected income statement data 2018 2017 2016 2015 (assume all sales are credit sales).. Net sales revenue 37,800 $ 37,000 $ 36,500 $ 35,000 Cost of goods sold 15,380 20,200 17,490 Operating expenses 14,100 15,300 15,800 Interest expense 330 405 510 Income taxes 315 964 1,029 3: Data Table Furniture industry averages Current ratio. 2.1 Quick ratio 1.0 Days' inventory outstanding 51.9 Days' sales outstanding... 44.5 Days' payable outstanding 38.3 Debt ratio 70% Times-interest-earned ratio 14.4 Gross margin percentage 54% Operating income percentage 12% 4: Requirements 1. Perform a trend analysis on Treble's sales revenue, inventory, and receivables over the past three years, using 2015 as the base. Is the trend in each of these areas favorable or unfavorable for the company? 2. Using the industry averages as benchmarks, analyze Treble's performance over the past three years in the following areas: c. Overall debt payment ability a. Liquidity b. Turnover d. Profitability 3. Evaluate Treble's quality of earnings. Are there any red flags in your analysis? Explain