had average sales las 019-2015. The firm's total assets at the end of 2017 were $400,000. n internal staff cost analyst has prepared the following financial data from the an ou have been hired as a consultant to help analyze the financial position. 2019 2018 2017 2016 Current Ratio 2.80 2.43 2.36 2.10 Acid Test Ratio 2.03 1.93 1.82 1.61 Days' Sales in Receivables 61 58 54 42
had average sales las 019-2015. The firm's total assets at the end of 2017 were $400,000. n internal staff cost analyst has prepared the following financial data from the an ou have been hired as a consultant to help analyze the financial position. 2019 2018 2017 2016 Current Ratio 2.80 2.43 2.36 2.10 Acid Test Ratio 2.03 1.93 1.82 1.61 Days' Sales in Receivables 61 58 54 42
Chapter9: Accounting For Receivables
Section: Chapter Questions
Problem 9EB: Using the following select financial statement information from Mover Supply Depot, compute the...
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Question
![The Cena and Lesnar, a retail clothier, has had average sales of $400,000 for the last five years,|
2019-2015. The firm's total assets at the end of 2017 were $400,000.
An internal staff cost analyst has prepared the following financial data from the annual reports.
You have been hired as a consultant to help analyze the financial position.
2019
2018
2017
2016
2015
Current Ratio
2.80
2.43
2.36
2.10
2.00
Acid Test Ratio
2.03
1.93
1.82
1.61
1.47
Days' Sales in Receivables
Merchandise Inventory Turnover
Debt Ratio
61
58
54
42
35
4.20
4.10
4.10
3.90
3.70
0.48
0.50
0.49
0.47
0.47
Times Interest Earned
4.60
4.80
5.90
5.70
6.00
Sales as a Percent of 1996 Sales
1.46
1.23
1.12
1.06
1.00
Net Income as a Percent of 1996
Income
1.31
1.20
1.10
1.06
1.00
Gross Profit Margin
Operating Expenses to Net Sales
Net Profit Margin
38.5%
38.8%
38.9%
40.0%
39.7%
11.4%
11.3%
11.5%
11.4%
11.7%
7.6%
8.6%
8.9%
9.4%
9.3%
Return on Total Assets
9.4%
9.6%
9.6%
10.0%
10.7%
Required:
a. Explain the trend in liquidity. Make specific reference to the effect of receivables and
inventory on this trend.
b. Briefly describe the trend in the long-term, debt-paying ability of Cena and Lesnar.
Explain the cause(s) of this trend.
Cena and Lesnar net profit margin has declined substantially. Cite and discuss
specific causes of this.
d. Have Cena and Lesnar utilized its total assets effectively? Discuss the ability of
Cena and Lesnar to generate sales based on total assets. (Use DuPont analysis.)
Specifically cite and briefly describe two additional types of information that would
aid in your analysis.
с.
е.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fcd59c521-80a3-4b4d-b909-a4e2fa71c612%2Fa2da1a42-0531-408a-8340-c70faaabb80c%2Feo2len_processed.jpeg&w=3840&q=75)
Transcribed Image Text:The Cena and Lesnar, a retail clothier, has had average sales of $400,000 for the last five years,|
2019-2015. The firm's total assets at the end of 2017 were $400,000.
An internal staff cost analyst has prepared the following financial data from the annual reports.
You have been hired as a consultant to help analyze the financial position.
2019
2018
2017
2016
2015
Current Ratio
2.80
2.43
2.36
2.10
2.00
Acid Test Ratio
2.03
1.93
1.82
1.61
1.47
Days' Sales in Receivables
Merchandise Inventory Turnover
Debt Ratio
61
58
54
42
35
4.20
4.10
4.10
3.90
3.70
0.48
0.50
0.49
0.47
0.47
Times Interest Earned
4.60
4.80
5.90
5.70
6.00
Sales as a Percent of 1996 Sales
1.46
1.23
1.12
1.06
1.00
Net Income as a Percent of 1996
Income
1.31
1.20
1.10
1.06
1.00
Gross Profit Margin
Operating Expenses to Net Sales
Net Profit Margin
38.5%
38.8%
38.9%
40.0%
39.7%
11.4%
11.3%
11.5%
11.4%
11.7%
7.6%
8.6%
8.9%
9.4%
9.3%
Return on Total Assets
9.4%
9.6%
9.6%
10.0%
10.7%
Required:
a. Explain the trend in liquidity. Make specific reference to the effect of receivables and
inventory on this trend.
b. Briefly describe the trend in the long-term, debt-paying ability of Cena and Lesnar.
Explain the cause(s) of this trend.
Cena and Lesnar net profit margin has declined substantially. Cite and discuss
specific causes of this.
d. Have Cena and Lesnar utilized its total assets effectively? Discuss the ability of
Cena and Lesnar to generate sales based on total assets. (Use DuPont analysis.)
Specifically cite and briefly describe two additional types of information that would
aid in your analysis.
с.
е.
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