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a. Has Joshua & White's liquidity position improved or worsened? Explain. b. Has Joshua & White's ability to manage its assets improved or worsened? Explain. c. How has Joshua & White's profitability changed during the last year?

a. Has Joshua & White's liquidity position improved or worsened? Explain. b. Has Joshua & White's ability to manage its assets improved or worsened? Explain. c. How has Joshua & White's profitability changed during the last year?

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Financial Ratio Analysis.  A financial ratio by itself tells us little about a company since financial ratios vary a great deal across industries.  There are two basic methods for analyzing financial ratios for a company: time trend analysis and peer group analysis.  Why might each of these analysis methods be useful?  What does each tell you about the company’s financial health?

Profitability Ratios Profit Margin Basic Earning Power Return on Assets Return on Equity Market Value Ratios Earnings per share Price-to-earnings ratio Cash flow per share Price-to-cash flow ratio Book Value per share Market-to-book ratio a. Has Joshua & White's liquidity position improved or worsened? Explain. 8.86% 19.48% 10.93% 16.10% c. How has Joshua & White's profitability changed during the last year? ΝΑ 10.65 ΝΑ 7.11 ΝΑ 1.72 b. Has Joshua & White's ability to manage its assets improved or worsened? Explain.
Transcribed Image Text:Profitability Ratios Profit Margin Basic Earning Power Return on Assets Return on Equity Market Value Ratios Earnings per share Price-to-earnings ratio Cash flow per share Price-to-cash flow ratio Book Value per share Market-to-book ratio a. Has Joshua & White's liquidity position improved or worsened? Explain. 8.86% 19.48% 10.93% 16.10% c. How has Joshua & White's profitability changed during the last year? ΝΑ 10.65 ΝΑ 7.11 ΝΑ 1.72 b. Has Joshua & White's ability to manage its assets improved or worsened? Explain.
Joshua & White Technologies December 31 Income Statements (Thousands of Dollars) Sales COGS except excluding depr. and amort. Depreciation and Amortization Other operating expenses EBIT Interest Expense EBT Taxes (25%) Net Income Common dividends Addition to retained earnings Other Data Year-end Stock Price # of shares (Thousands) Lease payment (Thousands of Dollars) Sinking fund payment (Thousands of Dollars) Ratio Analysis Liquidity Ratios Current Ratio Quick Ratio Asset Management Ratios Inventory Turnover (Total COGS/Inventories) Days Sales Outstanding Fixed Assets Turnover Total Assets Turnover Debt Management Ratios Debt Ratio (Total debt-to-assets) Liabilities-to-assets ratio Times-interest-earned ratio EBITDA coverage ratio 2019 $420,000 300,000 19,660 27,600 $72,740 5,740 $67,000 16,750 $50.250 $18,125 $32,125 2019 $90.00 4,052 $20,000 $5,000 2019 2.44 0.37 3.57 45.63 2018 $400,000 298,000 18,000 22,000 $62,000 4,460 $57,540 14,385 $34.524 $17,262 $17,262 2018 $96.00 4,000 $20,000 $5,000 2018 Industry Avg 2.52 2.58 0.46 1.53 5.32 43.80 7.69 47.45 2.04 1.23 20.0% 32.1% 15.33 4.18 Calculate the ratios and answer the questions below. Add more space to the yellow boxes if you need to. Joshua & White Technologies: December 31 Balance Sheets (Thousands of Dollars) Assets Cash and cash equivalents Short-term investments Accounts Receivable Inventories Total current assets Net fixed assets Total assets Liabilities and equity Accounts payable Accruals Notes payable Total current liabilities Long-term debt Total liabilities Common stock Retained Earnings Total common equity Total liabilities and equity 2019 2018 $21,000 $20,000 3,759 3,240 52,500 48,000 84,000 56,000 $161,259 $127,240 223,097 200,000 $384,356 $327,240 $33,600 $32,000 12,600 12,000 19,929 6,480 $66,129 $50,480 67,662 58,320 $133,791 $108,800 178,440 178,440 72,125 40,000 $250,565 $218,440 $384,356 $327,240
Transcribed Image Text:Joshua & White Technologies December 31 Income Statements (Thousands of Dollars) Sales COGS except excluding depr. and amort. Depreciation and Amortization Other operating expenses EBIT Interest Expense EBT Taxes (25%) Net Income Common dividends Addition to retained earnings Other Data Year-end Stock Price # of shares (Thousands) Lease payment (Thousands of Dollars) Sinking fund payment (Thousands of Dollars) Ratio Analysis Liquidity Ratios Current Ratio Quick Ratio Asset Management Ratios Inventory Turnover (Total COGS/Inventories) Days Sales Outstanding Fixed Assets Turnover Total Assets Turnover Debt Management Ratios Debt Ratio (Total debt-to-assets) Liabilities-to-assets ratio Times-interest-earned ratio EBITDA coverage ratio 2019 $420,000 300,000 19,660 27,600 $72,740 5,740 $67,000 16,750 $50.250 $18,125 $32,125 2019 $90.00 4,052 $20,000 $5,000 2019 2.44 0.37 3.57 45.63 2018 $400,000 298,000 18,000 22,000 $62,000 4,460 $57,540 14,385 $34.524 $17,262 $17,262 2018 $96.00 4,000 $20,000 $5,000 2018 Industry Avg 2.52 2.58 0.46 1.53 5.32 43.80 7.69 47.45 2.04 1.23 20.0% 32.1% 15.33 4.18 Calculate the ratios and answer the questions below. Add more space to the yellow boxes if you need to. Joshua & White Technologies: December 31 Balance Sheets (Thousands of Dollars) Assets Cash and cash equivalents Short-term investments Accounts Receivable Inventories Total current assets Net fixed assets Total assets Liabilities and equity Accounts payable Accruals Notes payable Total current liabilities Long-term debt Total liabilities Common stock Retained Earnings Total common equity Total liabilities and equity 2019 2018 $21,000 $20,000 3,759 3,240 52,500 48,000 84,000 56,000 $161,259 $127,240 223,097 200,000 $384,356 $327,240 $33,600 $32,000 12,600 12,000 19,929 6,480 $66,129 $50,480 67,662 58,320 $133,791 $108,800 178,440 178,440 72,125 40,000 $250,565 $218,440 $384,356 $327,240
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