Requirements 1. Perform a trend analysis on Trenton'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 Trenton's performance over the past three years in the following areas: a. Liquidity c. Overall debt payment ability b. Turnover d. Profitability 3. Evaluate Trenton's quality of earnings. Are there any red flags in your analysis? Explain. Print Print Done Done 1 Data Table 2015 Selected balance sheet data Cash ...........$ Marketable securities................ Accounts receivable, net Inventory 2018 3,000 $ 1,300 7,500 6,600 18,400 7,000 25,400 3,400 6,200 2017 3,500 $ 1,500 7,000 4.600 16,600 8,200 24,800 1,900 3,700 2.500 2016 4,700 1,200 5,100 $ 2.800 13,800 9,500 23,300 1,400 4,450 Total current assets .......... Long-term assets ................. Total assets ....................... Accounts payable ......... 2,200 Short-term notes payable 5,400 Total current liabilities................ 8,800 6,800 11,000 510 Total long-term liabilities .... 3,290 8,026 11 NCINHILICO . . . . . . . . . . . . . Print Done A Data Table Selected income statement data 2015 34,800 Net sales revenue (assume all sales are credit sales) ...... $ Cost of goods sold. 2018 36,200 $ 21,600 10,500 2017 35,500 $ 16,340 10,900 365 995 2016 35,200 $ 13,780 11,400 Operating expenses. ................................. Interest expense.................................... 350 390 Income taxes............... 375 1,054 Print Done Done i Data Table Furniture industry averages Current ratio . Quick ratio. ................... 2.1 1.0 73.2 Days' inventory outstanding ....... 46.6 Days' sales outstanding ......... Days' payable outstanding ......... 35.7 Debt ratio ...................... 68% Times-interest-earned ratio ....... 14.8 Gross margin percentage ........ Operating income percentage ..... 59% 26% Print Done Requirement 1. Perform a trend analysis on Trenton'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%.) 2018 2017 2016 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 v in inventory indicates a The trend percentage in net receivables is than the increase in sales, which is The trend percentages for sales revenue is trend. Requirement 2. Using the industry averages as benchmarks, analyze Trenton'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.) 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.) Quick ratio + + + + 2018 2017 2016 ( ( ( + + + + 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.) Inventory turnover 2018 11111111 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.) = 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.) = 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.) 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 decimal places, X.XX.) = 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.) = 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.) + = 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.) = 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.) Times-interest-earned ratio 2018 IL LILIT 2017 2016 Trenton's performance over the past three years are due to: Select all that apply.) A. Operating income percentages are decreasing OB. Declining earnings O c. Improved accounts receivable turnover OD. Increasing debt ratio E. Decreased cash flow OF Buildup of inventories O G. Inability to collect accounts receivable OH. Increasing long-term liabilities II. Payment of accounts payable is getting faster J. Decreasing gross margin OK. Improved interest coverage Requirement 3. Evaluate Trenton'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%.) = Net income % 2018 2017 2016 Refer to the quality of earnings ratios you calculated in Requirements 2 and 3 and evaluate Trenton's quality of earnings. Are there any red flags in your analysis? Explain. All the ratios are ity of earnings is Requirements 1. Perform a trend analysis on Trenton'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 Trenton's performance over the past three years in the following areas: a. Liquidity c. Overall debt payment ability b. Turnover d. Profitability 3. Evaluate Trenton's quality of earnings. Are there any red flags in your analysis? Explain. Print Print Done Done 1 Data Table 2015 Selected balance sheet data Cash ...........$ Marketable securities................ Accounts receivable, net Inventory 2018 3,000 $ 1,300 7,500 6,600 18,400 7,000 25,400 3,400 6,200 2017 3,500 $ 1,500 7,000 4.600 16,600 8,200 24,800 1,900 3,700 2.500 2016 4,700 1,200 5,100 $ 2.800 13,800 9,500 23,300 1,400 4,450 Total current assets .......... Long-term assets ................. Total assets ....................... Accounts payable ......... 2,200 Short-term notes payable 5,400 Total current liabilities................ 8,800 6,800 11,000 510 Total long-term liabilities .... 3,290 8,026 11 NCINHILICO . . . . . . . . . . . . . Print Done A Data Table Selected income statement data 2015 34,800 Net sales revenue (assume all sales are credit sales) ...... $ Cost of goods sold. 2018 36,200 $ 21,600 10,500 2017 35,500 $ 16,340 10,900 365 995 2016 35,200 $ 13,780 11,400 Operating expenses. ................................. Interest expense.................................... 350 390 Income taxes............... 375 1,054 Print Done Done i Data Table Furniture industry averages Current ratio . Quick ratio. ................... 2.1 1.0 73.2 Days' inventory outstanding ....... 46.6 Days' sales outstanding ......... Days' payable outstanding ......... 35.7 Debt ratio ...................... 68% Times-interest-earned ratio ....... 14.8 Gross margin percentage ........ Operating income percentage ..... 59% 26% Print Done Requirement 1. Perform a trend analysis on Trenton'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%.) 2018 2017 2016 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 v in inventory indicates a The trend percentage in net receivables is than the increase in sales, which is The trend percentages for sales revenue is trend. Requirement 2. Using the industry averages as benchmarks, analyze Trenton'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.) 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.) Quick ratio + + + + 2018 2017 2016 ( ( ( + + + + 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.) Inventory turnover 2018 11111111 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.) = 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.) = 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.) 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 decimal places, X.XX.) = 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.) = 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.) + = 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.) = 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.) Times-interest-earned ratio 2018 IL LILIT 2017 2016 Trenton's performance over the past three years are due to: Select all that apply.) A. Operating income percentages are decreasing OB. Declining earnings O c. Improved accounts receivable turnover OD. Increasing debt ratio E. Decreased cash flow OF Buildup of inventories O G. Inability to collect accounts receivable OH. Increasing long-term liabilities II. Payment of accounts payable is getting faster J. Decreasing gross margin OK. Improved interest coverage Requirement 3. Evaluate Trenton'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%.) = Net income % 2018 2017 2016 Refer to the quality of earnings ratios you calculated in Requirements 2 and 3 and evaluate Trenton's quality of earnings. Are there any red flags in your analysis? Explain. All the ratios are ity of earnings is