Foundations of Financial Management
16th Edition
ISBN: 9781259277160
Author: Stanley B. Block, Geoffrey A. Hirt, Bartley Danielsen
Publisher: McGraw-Hill Education
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Textbook Question
Chapter 3, Problem 12P
AllState Trucking Co. has the following ratios compared to its industry for last year:
Explain why the return-on-assets ratio is so much more favorable than the return-on-sales ratio compared to the industry. No numbers are necessary; a one- sentence answer is all that is required.
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The initial analysis should include the following:
The ratio equation
The calculation of the ratio using the equation with the financial data from the two assigned companies.
Use the result in a sentence; i.e. For every dollar invested in assets the company is earning 22.4 cents or 22.4% in net income.
Then explain whether this is a good result or a result that needs improving.
The original post should include at least three (3) sentences but no more than seven (7) sentences.
Mason Inc. has only two retail and two wholesale customers. Information relating to each customer for 2020 follows:
(Click the icon to view the data.)
Requirement
Calculate customer-level operating income.
Begin by calculating each customer's gross margin. Then calculate the operating income for each customer. (Use parentheses or a minus sign to enter a negative gross margin or a customer-level
operating loss. Abbreviations used: cust = customer; oper. = operating.)
Wholesale
Gross margin
Customer-level operating income (loss)
West Region
Wholesaler
East Region
Wholesaler
Sloan Inc.
Retail
Snyder Corp
The new owners of Pak. Electric Co. have hired you to help them diagnose and cure problems that the company has had in maintaining adequate liquidity. As a first step, you perform a liquidity analysis. You then do an analysis of the company’s short-term activity ratios. Your calculations and appropriate industry norms are listed.RatiosCurrent RatioPak. Electric Co. 4.5Industry Average 4.0Quick RatioPak. Electric Co. 2.0Industry Average 3.1Inventory TurnoverPak. Electric Co. 6.0Industry Average 10.4Average Collection PeriodPak. Electric Co. 73 daysIndustry Average 52 daysAverage Payment PeriodPak. Electric Co. 31 days40 daysa. What recommendations relative to the amount and the handling of inventory could you make to the new owners?b. What recommendations relative to the amount and the handling of accounts receivable could you make to the new owners?
Chapter 3 Solutions
Foundations of Financial Management
Ch. 3 - If we divide users of ratios into short-term...Ch. 3 - Explain how the Du Pont system of analysis breaks...Ch. 3 - If the accounts receivable turnover ratio is...Ch. 3 - Prob. 4DQCh. 3 - Is there any validity in rule-of-thumb ratios for...Ch. 3 - Why is trend analysis helpful in analyzing ratios?...Ch. 3 - Inflation can have significant effects on income...Ch. 3 - What effect will disinflation following a highly...Ch. 3 - Why might disinflation prove favorable to...Ch. 3 - Comparisons of income can be very difficult for...
Ch. 3 - Low Carb Diet Supplement Inc. has two divisions....Ch. 3 - Database Systems is considering expansion into a...Ch. 3 - Prob. 3PCh. 3 - Prob. 4PCh. 3 - Prob. 5PCh. 3 - Dr. Zhivà€go Diagnostics Corp.’s income...Ch. 3 - The Haines Corp. shows the following financial...Ch. 3 - Easter Egg and Poultry Company has $2,000,000 in...Ch. 3 - Prob. 9PCh. 3 - Prob. 10PCh. 3 - Baker Oats had an asset turnover of 1.6 times per...Ch. 3 - AllState Trucking Co. has the following ratios...Ch. 3 - Front Beam Lighting Company has the following...Ch. 3 - Prob. 14PCh. 3 - Prob. 15PCh. 3 - Jerry Rice and Grain Stores has $4,780,000 in...Ch. 3 - Prob. 17PCh. 3 - Prob. 18PCh. 3 - Prob. 19PCh. 3 - Prob. 20PCh. 3 - Jim Short’s Company makes clothing for schools....Ch. 3 - The balance sheet for Stud Clothiers is shown...Ch. 3 - The Lancaster Corporation’s income statement is...Ch. 3 - Prob. 24PCh. 3 - Prob. 25PCh. 3 - Prob. 26PCh. 3 - Prob. 27PCh. 3 - Prob. 28PCh. 3 - The Global Products Corporation has three...Ch. 3 - Prob. 30PCh. 3 - Prob. 31PCh. 3 - Prob. 32PCh. 3 - Prob. 33PCh. 3 - Prob. 34PCh. 3 - The following information is from Harrelson...Ch. 3 - Using the financial statements for the Snider...Ch. 3 - Given the financial statements for Jones...
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