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Based on the following snippet of financial statements, evaluate financial performance for Corrigan Corporation use Du Pont Analysis.

Based on the following snippet of financial statements, evaluate financial performance for Corrigan Corporation use Du Pont Analysis.

FINANCIAL ACCOUNTING
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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Based on the following snippet of financial statements, evaluate financial performance for Corrigan Corporation use Du Pont Analysis.

 

Corrigan Corporation: Income Statements for Years Ending December 31 2008 2007 Sales $4,240,000 $3,635,000 Cost of goods sold Gross operating profit General administrative and selling expenses 3,680,000 2,980,000 $ 560,000 $ 655,000 236,320 213,550 Depreciation 159,000 154,500 Miscellaneous 134,000 127,000 Earnings before taxes (EBT) $ 159,950 $ 30,680 12,272 Taxes (40%) 63,980 $ 95,970 Net income $ 18408 Industry Financial Ratios 2008 Current ratio 2.7x Inventory turnover Days sales outstanding Fixed assets turnover Total assets turnover 7.0x 32.0 days 13.0x 2.6x Return on assets 9.1% Return on equity 18.2% Debt ratio 50.0% Profit margin 3.5% P/E ratio 6.0x Price/cash flow ratio 3.5x "Industry average ratios have been constant for the past 4 years. "Based on year-end balance sheet figures. "Calculation is based on a 365-day year. *Source : Brigham, Fundamental of Financial Management.
Transcribed Image Text:Corrigan Corporation: Income Statements for Years Ending December 31 2008 2007 Sales $4,240,000 $3,635,000 Cost of goods sold Gross operating profit General administrative and selling expenses 3,680,000 2,980,000 $ 560,000 $ 655,000 236,320 213,550 Depreciation 159,000 154,500 Miscellaneous 134,000 127,000 Earnings before taxes (EBT) $ 159,950 $ 30,680 12,272 Taxes (40%) 63,980 $ 95,970 Net income $ 18408 Industry Financial Ratios 2008 Current ratio 2.7x Inventory turnover Days sales outstanding Fixed assets turnover Total assets turnover 7.0x 32.0 days 13.0x 2.6x Return on assets 9.1% Return on equity 18.2% Debt ratio 50.0% Profit margin 3.5% P/E ratio 6.0x Price/cash flow ratio 3.5x "Industry average ratios have been constant for the past 4 years. "Based on year-end balance sheet figures. "Calculation is based on a 365-day year. *Source : Brigham, Fundamental of Financial Management.
2008 2007 Cash $ 72,000 $ 65,000 Accounts receivable 439,000 328,000 Inventories 894,000 813,000 Total current assets $1,405,000 $1,206,000 Land and building Machinery 238,000 271,000 132,000 133,000 Other fixed assets 61,000 $1,836,000 57,000 Total assets $1,667,000 Accounts and notes payable $ 432,000 $ 409,500 Accrued liabilities 170,000 162,000 Total current liabilities $ 602,000 $ 571,500 Long-term debt 404,290 258,898 Common stock 575,000 575,000 Retained earnings Total liabilities and equity 254,710 261,602 $1836.000 $1.667,000 Per-Share Data 2008 2007 EPS $0.80 $4.17 Cash dividends $1.10 $0.95 Market price (average) $12.34 $23.57 PE ratio 15.4x 5.65x Number of shares outstanding 23,000 23,000
Transcribed Image Text:2008 2007 Cash $ 72,000 $ 65,000 Accounts receivable 439,000 328,000 Inventories 894,000 813,000 Total current assets $1,405,000 $1,206,000 Land and building Machinery 238,000 271,000 132,000 133,000 Other fixed assets 61,000 $1,836,000 57,000 Total assets $1,667,000 Accounts and notes payable $ 432,000 $ 409,500 Accrued liabilities 170,000 162,000 Total current liabilities $ 602,000 $ 571,500 Long-term debt 404,290 258,898 Common stock 575,000 575,000 Retained earnings Total liabilities and equity 254,710 261,602 $1836.000 $1.667,000 Per-Share Data 2008 2007 EPS $0.80 $4.17 Cash dividends $1.10 $0.95 Market price (average) $12.34 $23.57 PE ratio 15.4x 5.65x Number of shares outstanding 23,000 23,000
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