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*Calculation is based on a 365-day year. Balance Sheet as of December $78 74 147 $299 Cash and equivalents Accounts receivables Inventories Total current assets Gross fixed assets Less depreciation Net fixed assets Total assets Net sales Cost of goods sold Gross profit Selling expenses EBITDA 216 55 $161 $460 Taxes (25%) Net Income Depreciation expense Earnings before interest and taxes (EBIT) Interest expense Earnings before taxes (EBT) Income Statement for Year Ended December 31, 2021 (millions of dollars) $815.00 670.00 $145.00 78.50 66.50 14.00 52.50 5.50 Current ratio Debt to total capital Times interest earned EBITDA coverage Inventory turnover Days sales outstanding Fixed assets turnover 31, 2021 (millions of dollars) Accounts payable Total assets turnover Profit margin Return on total assets Return on common equity Return on invested capital Other current liabilities Notes payable Total current liabilities Long-term debt Profit margin Total assets turnover Equity multiplier Total liabilities Common stock Retained earnings Total stockholders' equity Total liabilities and equity a. Calculate the following ratios. Do not round intermediate calculations. Round your answers to two decimal places. Firm Industry Average % days % $ 37 28 37 $102 23 $125 124 211 $335 $460 $ $ 47.00 11.75 35.25 2x 15% 5x 10x 9x 25days 6x 3x 3.75% 11.25% 15.70% 14.60% b. Construct a DuPont equation, and the industry. Do not round Intermediate calculations. Round your answers to two decimal places. Firm Industry. 3.75% 3x

*Calculation is based on a 365-day year. Balance Sheet as of December $78 74 147 $299 Cash and equivalents Accounts receivables Inventories Total current assets Gross fixed assets Less depreciation Net fixed assets Total assets Net sales Cost of goods sold Gross profit Selling expenses EBITDA 216 55 $161 $460 Taxes (25%) Net Income Depreciation expense Earnings before interest and taxes (EBIT) Interest expense Earnings before taxes (EBT) Income Statement for Year Ended December 31, 2021 (millions of dollars) $815.00 670.00 $145.00 78.50 66.50 14.00 52.50 5.50 Current ratio Debt to total capital Times interest earned EBITDA coverage Inventory turnover Days sales outstanding Fixed assets turnover 31, 2021 (millions of dollars) Accounts payable Total assets turnover Profit margin Return on total assets Return on common equity Return on invested capital Other current liabilities Notes payable Total current liabilities Long-term debt Profit margin Total assets turnover Equity multiplier Total liabilities Common stock Retained earnings Total stockholders' equity Total liabilities and equity a. Calculate the following ratios. Do not round intermediate calculations. Round your answers to two decimal places. Firm Industry Average % days % $ 37 28 37 $102 23 $125 124 211 $335 $460 $ $ 47.00 11.75 35.25 2x 15% 5x 10x 9x 25days 6x 3x 3.75% 11.25% 15.70% 14.60% b. Construct a DuPont equation, and the industry. Do not round Intermediate calculations. Round your answers to two decimal places. Firm Industry. 3.75% 3x

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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A firm has been experiencing low profitability in recent years. Perform an analysis of the firm's financial position using the DuPont equation. The firm has no lease payments but has a $1 million sinking fund payment on its debt. The most recent Industry average ratios and the firm's financial statements are as follows: Current ratio Debt-to-capital ratio Times interest earned EBITDA coverage Inventory turnover Days sales outstanding *Calculation is based on a 365-day year. Cash and equivalents Accounts receivables Inventories Total current assets Gross fixed assets Less depreciation Industry Average Ratios Net fixed assets Total assets 2x 15% 5x 10x 9x Balance Sheet as of December 31, 2021 (millions of dollars) $ 78 Accounts payable 74 Other current liabilities Notes payable Taxes (25%) Net Income 25days 147 $299 216 55 $161 $460 Fixed assets turnover Profit margin Total assets turnover Equity multiplier Total assets turnover Profit margin Return on total assets Return on common equity Return on invested capital Current ratio Debt to total capital Times interest earned EBITDA coverage Inventory turnover Days sales outstanding Fixed assets turnover Total assets turnover Profit margin Return on total assets Return on common equity Return on invested capital Depreciation expense Earnings before interest and taxes (EBIT) Interest expense Earnings before taxes (EBT) Total current liabilities Long-term debt Total llabilities Common stock Retained earnings Total stockholders' equity Total liabilities and equity Income Statement for Year Ended December 31, 2021 (millions of dollars) Net sales $ 815.00 Cost of goods sold 670.00 $145.00 Gross profit Selling expenses 78.50 EBITDA 66.50 14.00 52.50 5.50 % X X days X X 6x 3x 3.75% 11.25% 15.70% % % % 14.60% a. Calculate the following ratios. Do not round Intermediate calculations. Round your answers to two decimal places. Firm Industry Average % $ 37 28 37 $102 23 $125 124 211 $335 $460 $ $ 47.00 11.75 35.25 2x 15% 5x 10x 9x 25days 6x 3x 3.75% 11.25% 15.70% 14.60% b. Construct a DuPont equation, and the industry. Do not round Intermediate calculations. Round your answers to two decimal places. Firm Industry. % 3.75% 3x X
Transcribed Image Text:A firm has been experiencing low profitability in recent years. Perform an analysis of the firm's financial position using the DuPont equation. The firm has no lease payments but has a $1 million sinking fund payment on its debt. The most recent Industry average ratios and the firm's financial statements are as follows: Current ratio Debt-to-capital ratio Times interest earned EBITDA coverage Inventory turnover Days sales outstanding *Calculation is based on a 365-day year. Cash and equivalents Accounts receivables Inventories Total current assets Gross fixed assets Less depreciation Industry Average Ratios Net fixed assets Total assets 2x 15% 5x 10x 9x Balance Sheet as of December 31, 2021 (millions of dollars) $ 78 Accounts payable 74 Other current liabilities Notes payable Taxes (25%) Net Income 25days 147 $299 216 55 $161 $460 Fixed assets turnover Profit margin Total assets turnover Equity multiplier Total assets turnover Profit margin Return on total assets Return on common equity Return on invested capital Current ratio Debt to total capital Times interest earned EBITDA coverage Inventory turnover Days sales outstanding Fixed assets turnover Total assets turnover Profit margin Return on total assets Return on common equity Return on invested capital Depreciation expense Earnings before interest and taxes (EBIT) Interest expense Earnings before taxes (EBT) Total current liabilities Long-term debt Total llabilities Common stock Retained earnings Total stockholders' equity Total liabilities and equity Income Statement for Year Ended December 31, 2021 (millions of dollars) Net sales $ 815.00 Cost of goods sold 670.00 $145.00 Gross profit Selling expenses 78.50 EBITDA 66.50 14.00 52.50 5.50 % X X days X X 6x 3x 3.75% 11.25% 15.70% % % % 14.60% a. Calculate the following ratios. Do not round Intermediate calculations. Round your answers to two decimal places. Firm Industry Average % $ 37 28 37 $102 23 $125 124 211 $335 $460 $ $ 47.00 11.75 35.25 2x 15% 5x 10x 9x 25days 6x 3x 3.75% 11.25% 15.70% 14.60% b. Construct a DuPont equation, and the industry. Do not round Intermediate calculations. Round your answers to two decimal places. Firm Industry. % 3.75% 3x X
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