Question
You have been hired as an analyst for Mellon Bank and your team is working on an independent assessment of Daffy Duck Food Inc. (DDF
You have been hired as an analyst for Mellon Bank and your team is working on an independent assessment of Daffy Duck Food Inc. (DDF Inc.) DDF Inc. is a firm that specializes in the production of freshly imported farm products from France. Your assistant has provided you with the following data for Flipper Inc and their industry.
Ratio | 2014 | 2015 | 2016 | 2016 Industry Average |
Long-term debt | 0.45 | 0.40 | 0.35 | 0.35 |
Inventory Turnover | 62.65 | 42.42 | 32.25 | 53.25 |
Depreciation/Total Assets | 0.25 | 0.014 | 0.018 | 0.015 |
Days sales in receivables | 113 | 98 | 94 | 130.25 |
Debt to Equity | 0.75 | 0.85 | 0.90 | 0.88 |
Profit Margin | 0.082 | 0.07 | 0.06 | 0.075 |
Total Asset Turnover | 0.54 | 0.65 | 0.70 | 0.40 |
Quick Ratio | 1.028 | 1.03 | 1.029 | 1.031 |
Current Ratio | 1.33 | 1.21 | 1.15 | 1.25 |
Times Interest Earned | 0.9 | 4.375 | 4.45 | 4.65 |
Equity Multiplier | 1.75 | 1.85 | 1.90 | 1.88 |
You are asked to critically evaluate provide the shareholders with an assessment of the firm's solvency, leverage and capital structure. Be as complete as possible given the above information, but do not use any irrelevant information.
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