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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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