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 Long-term debt Inventory Turnover Depreciation/Total Assets Days' sales in receivables 1999 0.45 62.65 0.25 113 1998 0.40 42.42 0.014 98 4 1997 0.35 32.25 0.018 94 0 1999- Industry Average 0.35 53.25 0.015 130.25 0.00
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 Long-term debt Inventory Turnover Depreciation/Total Assets Days' sales in receivables 1999 0.45 62.65 0.25 113 1998 0.40 42.42 0.014 98 4 1997 0.35 32.25 0.018 94 0 1999- Industry Average 0.35 53.25 0.015 130.25 0.00
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Ss.222.
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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
Long-term debt
Inventory Turnover
Depreciation/Total
Assets
Days' sales in
receivables
Debt to Equity
Profit Margin
Total Asset Turnover
Quick Ratio
Current Ratio
Times Interest Earned
Equity Multiplier
1999
0.45
62.65
0.25
113
3
0.75
0.082
0.54
1.028
1.33
0.9
1.75
1998
0.40
42.42
0.014
98
0.85
0.07
0.65
18841.21809
4.375
1.855
C
1997
(66
1-
0.35
32.25
0.018
1.031.029
94
0.90
0.06
0.70
1.15
4.45
1.90
1999-
Industry
Average
0.35
53.25
0.015
130.25
0.88
0.075
0.40
1.031
1.25
4.65
1.88
a. In the annual report to the shareholders, the CEO of Flipper Inc wrote, "1997 was a good year
for the firm with respect to our ability to meet our short-term obligations. We had higher
liquidity largely due to an increase in highly liquid current assets (cash, account receivables
and short-term marketable securities)." Is the CEO correct? Explain and use only relevant
information in your analysis.
b. What can you say about the firm's asset management? Be as complete as possible given the
above information, but do not use any irrelevant information.
4
c. You are asked to provide the shareholders with an assessment of the firm's solvency and
leverage. Be as complete as possible given the above information, but do not use any
irrelevant information.
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