A firm has been experiencing low profitability in recent years. Perform an analysis of the firm's financial position using the DuPont equation. The firm has no lease payments but has a $3 million sinking fund payment on its debt. Themost recent industry average ratios and the firm's financial statements are as follows:Industry Average RatiosCurrent ratioDebt-to-capital ratioTimes interest earnedEBITDA coverageInventory turnoverCash and equivalentsAccounts receivablesInventoriesTotal current assets2x17%3 x6 x11 xDays salesoutstandingaCalculation is based on a 365-day year.Balance Sheet as of December 31, 2021 (millions of dollars)$78Accounts payableOther current liabilities51125Notes payable$ 254Total current liabilitiesLong-term debtTotal liabilitiesCommon stockRetained earningsTotal stockholders' equityTotal liabilities and equityGross fixed assetsLess depreciationNet fixed assetsTotal assets15 daysFixed assets turnoverTotal assets turnoverProfit marginReturn on total assetsReturn on commonequity19155$ 136$ 390—Return on investedcapital6 x4x2.50%10.00%14.70%14.40%$312043$9416$ 11090190$280$390— Income Statement for Year Ended December 31, 2021 (millions of dollars)$ 795.00680.00$115.0063.5051.5010.0041.505.5036.009.00Taxes (25%)Net income$ 27.00a. Calculate the following ratios. Do not round intermediate calculations. Round your answers to two decimal places.FirmIndustry AverageXNet salesCost of goods soldGross profitSelling expensesEBITDADepreciation expenseEarnings before interest and taxes (EBIT)Interest expenseEarnings before taxes (EBT)Current ratioDebt to total capitalTimes interest earnedEBITDA coverageInventory turnoverProfit marginTotal assets turnover2Equity multiplier337.679.936.6732.975.241.584.306.7010.104,301.58X×X2.50XX%Days sales outstandingFixed assets turnoverTotal assets turnoverProfit marginReturn on total assetsReturn on common equityReturn on invested capital14.40%7.20b. Construct a DuPont equation, and the industry. Do not round intermediate calculations. Round your answers to two decimal places.FirmIndustry2.50%XXX daysXXXXX%%%%%X$X$$2x17%3x6 x11 x15 days6 x44x2.50%10.00%14.70%4xX

The different financial ratios used for the analysis of the company performance are divided…

A firm has been experiencing low profitability in recent years. Perform an analysis of the firm's financial positio most recent industry average ratios and the firm's financial statements are as follows: Industry Average Ratios Current ratio Debt-to-capital ratio Times interest earned EBITDA coverage Inventory turnover Cash and equivalents Accounts receivables Inventories Days sales outstanding *Calculation is based on a 365-day year. Balance Sheet as of December $ 78 51 125 $254 Total current assets Gross fixed assets Less depreciation Fixed assets turnover Total assets turnover Profit margin Return on total assets Return on common equity 15 days Return on invested capital Net fixed assets Total assets 2x 17% 3x 6x 11x 191 55 $ 136 $390 31, 2021 (millions of dollars) Accounts payable Other current liabilities Notes payable Total current liabilities Long-term debt Total liabilities Common stock Retained earnings Total stockholders' equity Total liabilities and equity 6x 4x 2.50% 10.00% 14.70% 14.40% $31 20 43 $94 16 $110 90 190 $280 $390

A firm has been experiencing low profitability in recent years. Perform an analysis of the firm's financial positio most recent industry average ratios and the firm's financial statements are as follows: Industry Average Ratios Current ratio Debt-to-capital ratio Times interest earned EBITDA coverage Inventory turnover Cash and equivalents Accounts receivables Inventories Days sales outstanding *Calculation is based on a 365-day year. Balance Sheet as of December $ 78 51 125 $254 Total current assets Gross fixed assets Less depreciation Fixed assets turnover Total assets turnover Profit margin Return on total assets Return on common equity 15 days Return on invested capital Net fixed assets Total assets 2x 17% 3x 6x 11x 191 55 $ 136 $390 31, 2021 (millions of dollars) Accounts payable Other current liabilities Notes payable Total current liabilities Long-term debt Total liabilities Common stock Retained earnings Total stockholders' equity Total liabilities and equity 6x 4x 2.50% 10.00% 14.70% 14.40% $31 20 43 $94 16 $110 90 190 $280 $390

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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