The Corrigan Corporation's 2004 and 2005 financial statements follow, along with some industry average ratios. a. Assess Corrigan's liquidity position, and determine how it compares

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The Corrigan Corporation's 2004 and 2005 financial statements follow, along with some industry average ratios.

a. Assess Corrigan's liquidity position, and determine how it compares with peers and how the liquidity position has changed over time.

b. Assess Corrigan's asset management position, and determine how it compares with peers and how its asset management efficiency has changed over time.

c. Assess Corrigan's debit management position, and determine how it compares with peers and how its debt management has changed over time

d. Asses Corrigan's profitability ratios, and determine how they compare with peers and how the profitability position has changed over time.

e. Assess Corrigan's market value ratios, and determine how their valuation compares with peers and how it has changed over time.

f. Calculate Corrigan's ROE, as well as the industry average ROE, using the extended Du Pont Equation. From this analysis, how does Corrigan's financial position compare with the industry average numbers?

g. What do you think would happen to its ratios if the company initiated cost-cutting measures that allowed it to hold lower levels of inventory and substantially decreased the cost goods sold? No calculations are necessary. Think about which ratios would be affected by changes in these two accounts.

a. Industry average ratios have been constant for the past 4 years.
b. Based on year-end balance sheet figures.
c. Calculation is based on a 365-daysyear.

Corrigan Corporation: Balance Sheets as of December 31 Accounts receivable 8 2 Total current assets Land and building $1,405,000 $1,206,000 2 $1,836,000 $1,667,000 Accounts and notes payable Accrued liabilities Total current liabilities Long-term debt Total liabilities and quity Corrigan Corporation: Income Statements for Years Ending December 31 2005 2004 Sales Cost of goods sold $4,240,000 3.680,000 $ 560,000 236,320 159,000 134,000 $30,680 12,272 $18.408 $3,635,000 2.980,000 $ 655,000 213,55O 154,50o 127,00O $ 159,950 63,980 $ 95,970 Gross operating profit General administrative and selling expenses Depreciation Miscellaneous Eamings before taxes (EBT) Taxes (40%) Net income PerShare Data 2005 2004 EPS Cash dividends Market price (average) P/E ratio Number of shares outstanding %0.8o $1.10 12.34 15.4X 23,000 $4.17 $0.95 $23.57 5.65 23,00 industry Financial Ratios Current ratio 2.7 Days sales outstanding Fixed assets turnoverb Total assets turnoverb Return on assets Return on equity Debt ratio Profit margin on sales P/E ratio Price/cash flow ratio 7.0x 32 days 13.0x 2.6x 9.1% 18.2% 50.0% 3.5% 6.0x 3.5x