Intermediate Financial Management (MindTap Course List)
12th Edition
ISBN: 9781285850030
Author: Eugene F. Brigham, Phillip R. Daves
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Videos
Question
Chapter 7, Problem 3MC
Summary Introduction
Case summary:
The first part of the case presented in Chapter 6, after an expansion program, discussed the situation of company C. In 2015, there was a big loss rather than the anticipated profit. As an outcome, the company is concerned about the survival of its managers, directors, and investors.
Person J was brought in as a subordinate to the chairman of company C, who had the job of returning the business to a wide-ranging financial position. Company C needs to prepare an evaluation of where the organization is now, what it wants to do to restore its financial health and what steps it needs to take.
To discuss: The inventory turnover, DSO, fixed asset turnover and total asset turn over and compare with industry.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
What financial metric measures a company's ability to cover its short-term
obligations with its most liquid assets and is calculated by excluding inventory from
the current assets?
A. Quick ratio
B. Current ratio
C. Inventory turnover ratio
D. Return on assets ratio
What is the comparison (analysis) of the Total Assets Turnover of Industry Average Ratio and the Company A Ratio? The Total Assets Turnover has decreased and increased. Why?
Industry Average Total Assets Turnover
2015: 0.17
2016: 0.18
2017: 0.19
2018: 0.15
2019: 0.19
Company A Total Assets Turnover
2015: 0.15
2016: 0.14
2017: 0.20
2018: 0.14
2019: 0.22
Selected ratios of Company X are shown below:
Inventory turnover
Days' sales uncollected
Days' purchases in accounts payable
Total asset turnover
Equity ratio
Times interest earned
2021
5.3
32.4
21.0
2.6
0.8
N.A.
2020
7.1
18.3
20.0
2.5
0.8
N.A.
Using the financial ratios provided, analyse the performance of Company X in 2021
compared to the previous year.
Chapter 7 Solutions
Intermediate Financial Management (MindTap Course List)
Ch. 7 - Define each of the following terms:
Liquidity...Ch. 7 - Financial ratio analysis is conducted by managers,...Ch. 7 - Prob. 3QCh. 7 - Profit margins and turnover ratios vary from one...Ch. 7 - How might (a) seasonal factors and (b) different...Ch. 7 - Why is it sometimes misleading to compare a...Ch. 7 - Greene Sisters has a DSO of 20 days. The companys...Ch. 7 - Vigo Vacations has $200 million in total assets,...Ch. 7 - Winston Watch’s stock price is $75 per share....Ch. 7 - Reno Revolvere has an EPS of $1.50, a cash flow...
Ch. 7 - Needham Pharmaceuticals has a profit margin of 3%...Ch. 7 - Prob. 6PCh. 7 - Ace Industries has current assets equal to 3...Ch. 7 - Prob. 10PCh. 7 - The Kretovich Company had a quick ratio of 1.4, a...Ch. 7 - Prob. 13PCh. 7 - Prob. 14PCh. 7 - Prob. 1MCCh. 7 - Prob. 2MCCh. 7 - Prob. 3MCCh. 7 - Prob. 4MCCh. 7 - Prob. 5MCCh. 7 - Prob. 6MCCh. 7 - Prob. 7MCCh. 7 - Prob. 8MCCh. 7 - Prob. 9MCCh. 7 - Prob. 10MC
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Similar questions
- Calculate the 2019 inventory turnover, days sales outstanding (DSO), fixed assets turnover, and total assets turnover. How does Computrons utilization of assets stack up against that of other firms in its industry?arrow_forward2. 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…arrow_forwardCompare the performance of Fly X to the Industry. For each ratio, comment on whether Fly X is positive or negative relative to the Industry. Median Industry Fly X Ratios Current Ratio 1.43X 1.45 Quick Ratio 0.84X 0.88 Total Asset Turnover Ratio 0.85 1.30 Inventory Turnover Ratio 6.15 12.10 Average Inventory Ratio 59.35 30.17 Receivables Turnover 9.82 13.08 Average Collection Period 37.17 27.90 Debt Ratio 0.52 0.39arrow_forward
- Which of the following ratios best measures the profitability of a company? a) Return on equity b) Gross margin c) Current ratio d) Net operating asset turnoverarrow_forwardPlease Calculate and interpret the following ratios Activity: Inventory Turnover , Receivables Turnover, Payables Turnover Profitability: ROCE, Gross Profit Margin, E/Parrow_forwardCaculate and the following ratios for Apple Inc. Inventory turnover Profit margin Return on assets Return on Equityarrow_forward
- What is the comparison of TOTAL ASSET TURNOVER between Alex Company and the industry Average? Which one is better in terms of performance? Industry Average (Total Asset Turnover) 2015: 0.70 2016: 0.68 2017: 0.46 2018: 1.36 2019: 1.42 Alex company (Total Asset Turnover) 2015: 0.15 2016: 0.14 2017: 0.20 2018: 0.14 2019: 0.22arrow_forwardWhich ratio can provide an indication of the salability of the company's products? Question 20 options: A) Current ratio B) Account receivable turnover C) Gross profit margin D) Inventory turnoverarrow_forwardBelow are the two basic financial statements of Chiz Trading Company. You are tasked to prepare an analysis using Horizontal and Vertical Analysis of their two-dated financial statements. In addition to this you have been tasked to prepare financial ratios measuring the company’s: Liquidity Status Current Ratios Quick Asset Ratios Efficiency Status Asset Turnover Fixed Asset Turnover Inventory Turnover Days in Inventory Accounts Receivable Turnover Days in Receivable Profitability Status: Gross Profit margin Ratio Operating Income Ratio Net Profit Ratio Return on Assets Return on Equityarrow_forward
- What does the inventory turnover period ratio measure? Select one: a.Profitability. b.The average time an organisation holds inventory. c.The liquidity of the firm. d.How much the firm's current assets could decrease and still leave it able to pay its current liabilities.arrow_forwardWhat insights can be gained from inventory ratio analysis, such as inventory turnover ratio and number of days sales in inventory ratio?arrow_forwardFinancial statement data for years ending December 31 for Latchkey Company follows: a. Determine the ratio of sales to assets for 2016 and 2015. b. Does the change in the ratio of sales to assets from 2015 to 2016 indicate a favorable or an unfavorable trend?arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Intermediate Financial Management (MindTap Course...FinanceISBN:9781337395083Author:Eugene F. Brigham, Phillip R. DavesPublisher:Cengage Learning
Cornerstones of Financial AccountingAccountingISBN:9781337690881Author:Jay Rich, Jeff JonesPublisher:Cengage Learning
Principles of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax College
Financial AccountingAccountingISBN:9781305088436Author:Carl Warren, Jim Reeve, Jonathan DuchacPublisher:Cengage Learning
Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning
Intermediate Financial Management (MindTap Course...
Finance
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Cengage Learning
Cornerstones of Financial Accounting
Accounting
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Cengage Learning
Principles of Accounting Volume 1
Accounting
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax College
Financial Accounting
Accounting
ISBN:9781305088436
Author:Carl Warren, Jim Reeve, Jonathan Duchac
Publisher:Cengage Learning
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:Cengage Learning
Financial ratio analysis; Author: The Finance Storyteller;https://www.youtube.com/watch?v=MTq7HuvoGck;License: Standard Youtube License