2. Calculate the projected inventory turnover, days sales outstanding (DSO), fixed assets turnover, and total assets turnover. How does Abiproffy's utilization of assets stack up against other firms in its industry?Calculate the projected current and quick ratios based on the projected balance sheet and income statement data. What can you say about the company's liquidity position and its trend?Calculate the projected debt ratio, the debt-to-equity ratio, liabilities-to-assets ratio, earnings multiplier, times-interest-earned, and EBITDA coverage ratios. How does Abiproffy compare with the industry with respect to financial leverage? What can you conclude from these ratios?Calculate the projected price/earnings ratio and market/book ratio. Do these ratios indicate that investors are expected to have a high or low opinion of the company?It is commonly recommended that the managers of a firm compare the performance of their firm to that of its peers. Increasingly, this is becoming a more difficult task.Explain some of the reasons why comparisons of this type can frequently be either difficult to perform or produce misleading results. Week 2 Knowledge CheckFinancial Statements provide an overview of the company's operating results. Well-managed companies use their operating cash flows in different ways, including capitalexpenditures, acquisitions, dividend payments, stock repurchases, and saving for future needs. Which company made the right choices? Investors and managers use financialratios to analyze financial statements. To this end, some of the techniques used are trend analysis, common size analysis, and percentage change analysis. In addition, thefinancial ratios of a company are tied together in the DuPont Equation. Finally, the ratios are used to compare with other companies in the same industry.Abiproffy company entered an expansion program and encounter a large loss in 2019, rather than the expected profit. As a result, its managers, directors, and investors areconcerned about the firm's survival. James Brown was brought in as assistant to Abiproffy's chairman, who had the task of getting the company back into a sound financialposition. Brown must prepare an analysis of where the company is now, what it must do to regain its financial health, and what actions to take. Your assignment is to help himanswer the following questions. Provide clear explanations, not yes or no answers. Use the recent and projected financial information attached and answer the questionsbelow.1. Calculate the projected profit margin, operating profit margin, basic earning power (BEP), return on assets (ROA), and return on equity (ROE). What can you say aboutthese ratios?2. Calculate the projected inventory turnover, days sales outstanding (DSO), fixed assets turnover, and total assets turnover. How does Abiproffy's utilization of assets stackup against other firms in its industry?3. Calculate the projected current and quick ratios based on the projected balance sheet and income statement data. What can you say about the company's liquidityposition and its trend?4. Calculate the projected debt ratio, the debt-to-equity ratio, liabilities-to-assets ratio, earnings multiplier, times-interest-earned, and EBITDA coverage ratios. How doesAbiproffy compare with the industry with respect to financial leverage? What can you conclude from these ratios?5. Calculate the projected price/earnings ratio and market/book ratio. Do these ratios indicate that investors are expected to have a high or low opinion of the company?6. It is commonly recommended that the managers of a firm compare the performance of their firm to that of its peers. Increasingly, this is becoming a more difficult task.Explain some of the reasons why comparisons of this type can frequently be either difficult to perform or produce misleading results.Balance SheetsAssetsCash and equivalentsShort-term investmentsAccounts receivableInventoriesTotal current assetsNet Fixed AssetsTotal AssetsLiabilities and equityAccounts payable2018$ 60100400620$1,1802,900$4,0802018$ 3002019$ 5010520820$1,4003,500$4,9002019$ 4002020E$ 6050530660$1,3003.700$5,0002020E$ 330 Notes payableAccrualsTotal current liabilitiesLong-term bondsTotal liabilitiesCommon stock (100,000 shares)Retained earningsTotal common equityTotal liabilities and equityIncome StatementsNet salesCost of goods sold (Excluding depr.)DepreciationOther operating expensesEarnings before interest and taxes (EBIT)Less interestPre-tax earningsTaxes (25%)Net IncomeOther DataPer Share InformationEPSDPSBook Value Per ShareAdditional InformationDividendsAdditions to retained earningsYear-end shares outstandingYear-end common stock priceLease paymentsTax rate5020020182019$5,500$6,0004,3004,800290320350420$ 560$ 46068108$ 492$ 35288123$369$ 264Note: "E" denotes the "estimated forecast." Also, Abiproffy has no amortization.M$ 550800$1,3501,0001.730$2,730$4,080Note: "E" denotes the "estimated forecast."2018$3.69$0.90$27.30$90$279100$50.00$2025%250240$ 89027__1,100$1,9901,0001,910$2.910$4.9002019$2.64$0.84$29.10$84$180100$30.00$2025%2020E$6,6005,210370400$ 620_100$ 520130$ 3902020E$3.90$1.00$32.00$100$290100$49.00$2025%100270$ 7001.100$1,8001,0002.200$3.200$5,000

Ratio analysis looks at line-item data acquired from a corporation's financial records to get…

Answered: Calculate the projected inventory…

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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2. Calculate the projected inventory turnover, days sales outstanding (DSO), fixed assets turnover, and total assets turnover. How does Abiproffy's utilization of assets stack up against other firms in its industry?

Calculate the projected current and quick ratios based on the projected balance sheet and income statement data. What can you say about the company's liquidity position and its trend?
Calculate the projected debt ratio, the debt-to-equity ratio, liabilities-to-assets ratio, earnings multiplier, times-interest-earned, and EBITDA coverage ratios. How does Abiproffy compare with the industry with respect to financial leverage? What can you conclude from these ratios?
Calculate the projected price/earnings ratio and market/book ratio. Do these ratios indicate that investors are expected to have a high or low opinion of the company?
It is commonly recommended that the managers of a firm compare the performance of their firm to that of its peers. Increasingly, this is becoming a more difficult task.
Explain some of the reasons why comparisons of this type can frequently be either difficult to perform or produce misleading results.

Week 2 Knowledge Check
Financial Statements provide an overview of the company's operating results. Well-managed companies use their operating cash flows in different ways, including capital
expenditures, acquisitions, dividend payments, stock repurchases, and saving for future needs. Which company made the right choices? Investors and managers use financial
ratios to analyze financial statements. To this end, some of the techniques used are trend analysis, common size analysis, and percentage change analysis. In addition, the
financial ratios of a company are tied together in the DuPont Equation. Finally, the ratios are used to compare with other companies in the same industry.
Abiproffy company entered an expansion program and encounter a large loss in 2019, rather than the expected profit. As a result, its managers, directors, and investors are
concerned about the firm's survival. James Brown was brought in as assistant to Abiproffy's chairman, who had the task of getting the company back into a sound financial
position. Brown must prepare an analysis of where the company is now, what it must do to regain its financial health, and what actions to take. Your assignment is to help him
answer the following questions. Provide clear explanations, not yes or no answers. Use the recent and projected financial information attached and answer the questions
below.
1. Calculate the projected profit margin, operating profit margin, basic earning power (BEP), return on assets (ROA), and return on equity (ROE). What can you say about
these ratios?
2. Calculate the projected inventory turnover, days sales outstanding (DSO), fixed assets turnover, and total assets turnover. How does Abiproffy's utilization of assets stack
up against other firms in its industry?
3. Calculate the projected current and quick ratios based on the projected balance sheet and income statement data. What can you say about the company's liquidity
position and its trend?
4. Calculate the projected debt ratio, the debt-to-equity ratio, liabilities-to-assets ratio, earnings multiplier, times-interest-earned, and EBITDA coverage ratios. How does
Abiproffy compare with the industry with respect to financial leverage? What can you conclude from these ratios?
5. Calculate the projected price/earnings ratio and market/book ratio. Do these ratios indicate that investors are expected to have a high or low opinion of the company?
6. It is commonly recommended that the managers of a firm compare the performance of their firm to that of its peers. Increasingly, this is becoming a more difficult task.
Explain some of the reasons why comparisons of this type can frequently be either difficult to perform or produce misleading results.
Balance Sheets
Assets
Cash and equivalents
Short-term investments
Accounts receivable
Inventories
Total current assets
Net Fixed Assets
Total Assets
Liabilities and equity
Accounts payable
2018
$ 60
100
400
620
$1,180
2,900
$4,080
2018
$ 300
2019
$ 50
10
520
820
$1,400
3,500
$4,900
2019
$ 400
2020E
$ 60
50
530
660
$1,300
3.700
$5,000
2020E
$ 330

Notes payable
Accruals
Total current liabilities
Long-term bonds
Total liabilities
Common stock (100,000 shares)
Retained earnings
Total common equity
Total liabilities and equity
Income Statements
Net sales
Cost of goods sold (Excluding depr.)
Depreciation
Other operating expenses
Earnings before interest and taxes (EBIT)
Less interest
Pre-tax earnings
Taxes (25%)
Net Income
Other Data
Per Share Information
EPS
DPS
Book Value Per Share
Additional Information
Dividends
Additions to retained earnings
Year-end shares outstanding
Year-end common stock price
Lease payments
Tax rate
50
200
2018
2019
$5,500
$6,000
4,300
4,800
290
320
350
420
$ 560
$ 460
68
108
$ 492
$ 352
88
123
$369
$ 264
Note: "E" denotes the "estimated forecast." Also, Abiproffy has no amortization.
M
$ 550
800
$1,350
1,000
1.730
$2,730
$4,080
Note: "E" denotes the "estimated forecast."
2018
$3.69
$0.90
$27.30
$90
$279
100
$50.00
$20
25%
250
240
$ 890
27
__1,100
$1,990
1,000
1,910
$2.910
$4.900
2019
$2.64
$0.84
$29.10
$84
$180
100
$30.00
$20
25%
2020E
$6,600
5,210
370
400
$ 620
_100
$ 520
130
$ 390
2020E
$3.90
$1.00
$32.00
$100
$290
100
$49.00
$20
25%
100
270
$ 700
1.100
$1,800
1,000
2.200
$3.200
$5,000

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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