Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The Morrit Corporation has $450,000 of debt outstanding, and it pays an interest rate of 8% annually. Morrit's annual sales are $3 million, its average

image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
The Morrit Corporation has $450,000 of debt outstanding, and it pays an interest rate of 8% annually. Morrit's annual sales are $3 million, its average tax rate is 25%, and its net profit margin on sales is 4%. If the company does not maintain a TIE ratio of at least 5 to 1 , then its bank will refuse to renew the loan, and bankruptcy will result. What is Morrit's TIE ratio? Do not round intermediate calculations. Round your answer to two decimal places. Balance Sheet Analysis Complete the balance sheet and sales information in the table that follows for J. White Industries using the following financial data: Total assets turnover: 1.4 Gross profit margin on sales: (Sales - Cost of goods sold) / Sales =20% Total liabilities-to-assets ratio: 35% Quick ratio: 0.90 Days' sales outstanding (based on 365-day year): 36.5 days Inventory turnover ratio: 3.50 Do not round intermediate calculations. Round your answers to the nearest whole dollar. Cost of goods sold Balance Sheet Comprehensive Ratio Analysis Data for Lozano Chip Company and its industry averages follow. Lozano Chip Company: Balance Sheet as of December 31, 2019 (Thousands of Dollars) Calculate the indicated ratios for Lozano. Do not round intermediate calculations. Round your answers to two decimal places. Use the extended DuPont equation to calculate ROE for both Lozano and the industry. Do not round intermediate calculations. Round yur answers to two decimal places. For the firm, ROE is %. For the industry, ROE is %. c. Outline Lozano's strengths and weaknesses as revealed by your analysis. The firm's days sales outstanding is more than twice as long as the industry average, indicating that the firm should credit or enforce a stringent collection policy. The total assets turnover ratio is well the industry average so sales should be , assets , or both. While the company's profit margin is than the industry average, its other profitability ratios are compared to the industry - net income should be given the amount of equity and assets

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Hong Kong Auditing Economic Theory And Practice

Authors: Ferdinand A Gul

2nd Edition

9629371413, 978-9629371418

More Books

Students also viewed these Accounting questions