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 3120082007Sales$4,240,000$3,635,000Cost of goods soldGross operating profitGeneral administrative and selling expenses3,680,0002,980,000$ 560,000$ 655,000236,320213,550Depreciation159,000154,500Miscellaneous134,000127,000Earnings before taxes (EBT)$ 159,950$ 30,68012,272Taxes (40%)63,980$ 95,970Net income$ 18408Industry Financial Ratios2008Current ratio2.7xInventory turnoverDays sales outstandingFixed assets turnoverTotal assets turnover7.0x32.0 days13.0x2.6xReturn on assets9.1%Return on equity18.2%Debt ratio50.0%Profit margin3.5%P/E ratio6.0xPrice/cash flow ratio3.5x"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. 20082007Cash$ 72,000$ 65,000Accounts receivable439,000328,000Inventories894,000813,000Total current assets$1,405,000$1,206,000Land and buildingMachinery238,000271,000132,000133,000Other fixed assets61,000$1,836,00057,000Total assets$1,667,000Accounts and notes payable$ 432,000$ 409,500Accrued liabilities170,000162,000Total current liabilities$ 602,000$ 571,500Long-term debt404,290258,898Common stock575,000575,000Retained earningsTotal liabilities and equity254,710261,602$1836.000$1.667,000Per-Share Data20082007EPS$0.80$4.17Cash dividends$1.10$0.95Market price (average)$12.34$23.57PE ratio15.4x5.65xNumber of shares outstanding23,00023,000

DuPont Analysis: In general, DuPont Analysis means the breakup of one ratio into many ratios. In…

Answered: Based on the following snippet of…

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

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question: When preparing financial statements, which involve the culmination of various accounting principles and concepts, the process is crucial in portraying a company's financial health and performance. Among the key components, the income statement and the balance sheet stand as fundamental snapshots. The income statement delineates a company's revenues, expenses, and ultimately its profitability over a specific period, employing either the accrual basis or cash basis accounting. On the other hand, the balance sheet provides an overview of a company's assets, liabilities, and shareholders' equity at a given point in time, adhering to the accounting equation where assets are equal to liabilities plus shareholders' equity. Furthermore, the matching principle necessitates that expenses be recorded in the same period as the related revenues they helped generate, facilitating a more accurate representation of the company's financial performance. In the context of accounting…