PROJECT:
You have been hired as an analyst for Metro Bank and your team is working on an independent assessment of Korsiney’s Food Inc. (KF Inc.) KF 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 |
1999 |
1998 |
1997 |
1999- Industry Average |
|
Long-term debt |
0.45 |
0.40 |
0.35 |
0.35 |
|
Inventory Turnover |
62.65 |
42.42 |
32.25 |
53.25 |
|
|
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 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. Discuss its ability to pay interest.
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