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Show ALL work Ratio Analysis. The Williams Corporations forecasted 2010 financial statements follow, along with some industry average ratios. Forecasted Balance Sheet as of December

Show ALL work

Ratio Analysis. The Williams Corporations forecasted 2010 financial statements follow, along with some industry average ratios.

Forecasted Balance Sheet as of December 31, 2010

Cash

$ 72,000

Accounts receivables

$ 439,000

Accounts and notes payable

$ 432,000

Inventories

$ 894,000

Accruals

$ 170,000

Total current assets

$1,405,000

Total current liabilities

$ 602,000

Land and building

$ 238,000

Long-term debt

$ 404,290

Machinery

$ 132,000

Common stock

$ 575,000

Other fixed assets

$ 61,000

Retained earnings

$ 254,710

Total assets

$1,836,000

Total liabilities and equity

$1,836,000

Forecasted Income Statement for 2010

Sales

$4,290,000

Cost of goods sold

$3,580,000

Per-Share Data

Gross operating profit

$ 710,000

EPS

$ 4.71

General admin & selling expenses

$ 236,320

DPS

$ 0.95

Depreciation

$ 159,000

P/E Ratio

5.00

Misc.

$ 134,000

Market price

$ 23.57

Earnings before Taxes

$ 180,680

Number of shares outstanding

23000

Taxes

$ 72,272

Net Income

$ 108,408

Industry Financial Ratios

Williams Financial Ratios

Ratio/Comment

Quick Ratio

1x

Quick Ratio

Current Ratio

2.7x

Current Ratio

Inventory Turnover

7x

Inventory Turnover

Days Sales Outstanding

40 days

Days Sales Outstanding

Fixed Asset Turnover

13x

Fixed Asset Turnover

Total Asset Turnover

2.6x

Total Asset Turnover

Return on Assets

9.10%

Return on Assets

Return on Equity

18.20%

Return on Equity

Debt Ratio

55%

Debt Ratio

Profit Margin on Sales

3.50%

Profit Margin on Sales

P/E Ratio

6x

P/E Ratio

a. Calculate the indicated ratios for Williams in the appropriate blanks.

b. Outline Williams strengths and weaknesses as compared to its industry. Be detailed in your ratio analysis.

c. Recommend at least three areas for correction. Be sure to support your recommendations.

d. Why is being trustworthy essential to success in the business world? Use at least two of the following scriptures to answer this question: Psalm 101:7, Proverbs 4:20-27, Proverbs 13:11, and Proverbs 28:12-13.

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