Question
Use the balance sheet and income statement found in the HVAC case on Canvas (see Cases folder) to calculate the missing ratios to 2 decimal
Use the balance sheet and income statement found in the HVAC case on Canvas (see Cases folder) to
calculate the
missing
ratios to 2 decimal places for the
1993 column
in the table on the next page.
Use
the 1994 calculation
detail along with balance sheet and income statement
to determine the formula
needed to calculate the ratios for 1993. There are 10 missing ratios.
Show your calculations
in the last
column for each of the ratios that you calculate. You may type or handwrite
your answers (two decimal
places)
in the spaces on the ratio table provided. (10 pts)
After you complete the 10 missing ratios for 1993
think/ponder/ruminate on what each ratio attempts
to measure (think on all, but only write-up the ratios listed below). How is HVAC doing on this measure
versus prior years? The industry average? What can we learn about the company from this information?
Your written analysis (2-page maximum 20 pts.) must specifically address the following:
What do the Current, Quick, Accounts Receivable Turn, and Days Sales Outstanding attempt
to measure?
What is HVACs liquidity position as measured by the
current/quick ratios
?
Does knowledge of the companys
Accounts Receivable Turnover and DSO
alter (in any way)
your original assessment of the current and quick ratios? Why or Why not? What additional
questions does your reading of the case raise?
All papers and ratios are due at the beginning of class.
Your written analysis is subject to scrutiny for grammar and spelling just like any other written
assignment.
Staple your ratio table to your written analysis.
HVAC Ratio Analysis Name _____________________________________________
See Balance Sheet & Income Stmt. in HVAC Case on Canvas.
LIQUIDITY RATIOS Current | IND AVG |
1994 |
1993 |
1992 |
1994 Calculation Detail | 1993 Calculation please show your work for each ratio. |
1.4 | 1.5 | 1 | 1.5 | $1,019,968 / $691,573 | 1
| |
Quick | 1.1 | 1.2 | 2 | 1.3 | ($114,684 + $691,656) / $691,573 | 2 |
Sales/Receivables | 14.9 | 8.4 | 3 | 7.1 | $5,839,956 / $691,656 | 3
|
Days Sales Outstanding | 24.5 | 43.2 | 4 | 51.1 | 365 / 8.44344 | 4
|
Inventory Turnover | 34.9 | 31.3 | 5 | 30.9 | $3,871,000 / $123,664 | 5
|
Average Age of Inventory | 10.5 | 11.7 | 6 | 11.8 | 365 / 31.30256 | 6
|
Direct Costs/Payables | 26.2 | 16.8 | 16.4 | 13.2 | $3,871,000 / $230,431 | XXXXXXXXXXXXXXXXXXXXX |
Sales/Working Capital | 28.3 | 17.8 | 18.8 | 16.1 | $5,839,956 / ($1,019968 - $691,573) | XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX |
COVERAGE RATIOS Times Interest Earned | IAvg | 1994 | 1993 | 1992 | 1994 Calculation | 1993 Calculation |
2.1 | 2.1 | 1.4 | 4.7 | $50,925 /$24,451 | XXXXXXXXXXXXXXXXXXXXX | |
Current Maturities Coverage | 1.8 | 1.4 | 0.4 | 0.9 | ($66,407 + $34,800 + $3,171) / ($76,450 + $0) | XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX |
LEVERAGE RATIOS Fixed/Worth | IAvg | 1994 | 1993 | 1992 | 1994 Calculation | 1993 Calculation |
1.0 | 0.3 | 7 | 0.5 | $153,047 / ($492,473 - $31,126) | 7 | |
Debt/Worth | 2.0 | 1.5 | 1.9 | 2.3 | $713,257 / ($492,473 - $31,126) | XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX |
OPER. PROFITABILITY %EBT/Tangible Net Worth | IAvg | 1994 | 1993 | 1992 | 1994 Calculation | 1993 Calculation |
8.0% | 5.7% | 2.4% | 12.5% | $26,474 / ($492,473 -$31,126) | XXXXXXXXXXXXXXXXXXXXX | |
%EBT/Total Assets | 3.4% | 2.2% | 8 | 3.5% | $26,474 / $1,205,730 | 8
|
Sales/Net Fixed Assets | 14.8 | 38.2 | 28.6 | 27.8 | $5,839,956 / $153,047 | XXXXXXXXXXXXXXXXXXXXX |
Sales/Total Assets | 3.8 | 4.8 | 9 | 4.1 | $5,839,956 / $1,205,730 | 9 |
%Officers Comp/Sales | 3.0% | 6.1% | 7.3% | 7.4% | $354,060 / $5,839,956 | XXXXXXXXXXXXXXXXXXXXX |
Gross Profit Margin | 24.7% | 33.7% | 10 | 28.9% | ($5,839,956 - $3,871,000)/ $5,839,956 | 10 |
Operating Expenses | 23.2% | 32.8% | 32.1% | 27.8% | ($5,789,031 - $3,871,000)/ $5,839,956 | XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX |
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