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What does the calculated data tell us about Red Dress Press, Inc.? Provide an analysis that includes comparison to industry averages as well as year

What does the calculated data tell us about Red Dress Press, Inc.? Provide an analysis that includes comparison to industry averages as well as year to year comparison. Is Red Dress Press, Inc. performing better in 202X compared to 202Y? Provide 3-5 sentences for your response.








Module 1 Problem #1: Financial Analysis










Directions:The Red Dress Press, Inc. is a daily newspaper publishing company, located in Springfield, somewhere in the United States. Business for the company has been fluctuating over the past several years. To get a better handle on the health of the business, the CFO has requested that data for the previous years of 202X and 202Y be compared to each other, as well as to industry averages. Using the financial data provided below, calculate the requested ratios and provide your analysis of the current financial situation at Red Dress Press. Use the functions of Excel for calculating your data to simplify the process. Enter answers into each colored cell.







Red Dress Press, Inc.




December 31 Balance Sheets



(Thousands of Dollars)











Assets

202X 202Y

Cash and cash equivalents
$256,009 $275,000

Short-term investments
2,765 2,599

Accounts Receivable
82,518 74,560

Inventories

36,950 40,500

Total current assets
$378,242 $392,659

Net fixed assets
25,100 28,001

Total assets

$403,342 $420,660








Liabilities and equity




Accounts payable
$28,632 $25,000

Accruals

14,230 14,000

Short term notes payable
35,250 33,260

Total current liabilities
$78,112 $72,260

Long-term debt
145,230 164,000

Total liabilities
$223,342 $236,260

Common stock
126,000 127,500

Retained Earnings
54,000 56,900

Total common equity
$180,000 $184,400

Total liabilities and equity
$403,342 $420,660








Red Dress Press, Inc. Inc.



December 31 Income Statements



(Thousands of Dollars)







202X 202Y

Sales

$569,400 $589,400

COGS

248,000 259,000

Gross Profit
321,400 330,400

Depreciation and Amortization 23,600 22,450

Other operating expenses
62,000 62,500

Operating Income
259,400 267,900

EBIT

$235,800 $245,450

Interest Expense
6,300 6,000

EBT

$229,500 $239,450

Taxes (40%)

91,800 95,780

Net Income

$137,700 $143,670








Common dividends
$17,950 $18,900

Addition to retained earnings $16,730 $23,680








Other Data

202X 202Y

Year-end Share/Stock Price $47.53 $23.80

# of shares (Thousands)
6,250 12,500

Lease payment (Thousands of Dollars) $30,000 $31,000

Annual Cost of Sales
$100,099 $102,450

Market Value of Equity
$185,200 $185,600















Ratio Analysis
202X 202Y Industry Avg







Profitability Ratios




Gross Profit Margin
56.45 56.06 60.1%
Operating Margin
45.56 45.45 53.7%
EBIT Margin
41.41 41.64 41.0%
Net Profit Margin
24.18 24.38 28.9%







Liquidity Ratios




Current Ratio
4.84 5.43 5.00
Quick Ratio
4.37 4.87 4.53
Cash Ratio
3.28 3.81 2.63







Working Capital Ratios




Accounts Receivable Days 53 46 59.85
Accounts Payable Days 18 15 20.40
Inventory Days (Turnover) 24 25 1.95







Leverage Ratios




Debt-to-equity ratio (book) 1.24 1.28 43.2%
Debt-to-equity ratio (market) 1.21 1.27 44.1%
Debt -to-capital ratio
1.77 1.85 13.8%
Equity multiplier (book)
2.24 2.28 1.8







Valuation Ratios




Earnings per share
$22.03 $11.49 NA
Price-to-earnings ratio
$2.16 $2.07 N/A







Operating Returns




Asset Turnover


1.05
Return on Equity


27.50%
Return on Assets


15.70%














Perform a Dupont Analysis for Red Dress Press, Inc. for 202X and 202Y















ROE = Net Profit Margin x Asset Turnover x Equity Multiplier (book)
202X





202Y


























Analysis:














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