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2. Financial statements for Skyline Inc. and industry average financial ratios are shown below. Current Assets Cash A/R Inventories Total CA Net fixed assets Net plant and equipment Total Assets Sales COGS EBIT (Opering income) Interest expense EBT (Taxable income) Taxes (40%) Net income Ratio Current ratio Assets Days sales outstanding Inventory turnover Gross profit Fixed operating expenses except depreciation Earnings before interest, taxes, depre and amort (EBITDA) Depreciation Total assets turnover Net profit margin a. Calculate the indicated ratios for Skyline. Return on assets (ROA) Equity multiplier Return on equity (ROE) Debt ratio Balance Sheet as of Dec 31 Skyline 2021 Industry 75,500 330,000 300,500 706,000 315,500 Income Statement for the year ending Dec 31 Current Liabilities Accts payable Notes payable Other current liabilities Total CL Long-term debt Total Liabilities Common Equity 1,021,500 Total Liabilities and Equity Liabilities and Owner's Equity DuPont ROA 2021 1,902,650 (1,538,000) 364,650 (220,000) 144,650 (45,000) 99,650 (52,000) 47,650 (19,060) 28.590 Skyline 2021 155,000 84,000 115,000 354,000 358,500 712,500 309,000 1,021,500 Industry Average DuPont ROE 2.0 X 35 days 5.6 X 3.0 X 1.20% 3.60% b. Construct the DuPont equation for both Skyline and the industry and explain why, compared to industry, - Skyline's ROA is lower in the midst of high NPM Skyline's ROE is higher while ROA is lower 9.00% 2.50 X 60% c. Summarize Skyline's financial position by analyzing its strengths and weaknesses as revealed by your analysis. What action should the company take to improve the financial performance

2. Financial statements for Skyline Inc. and industry average financial ratios are shown below. Current Assets Cash A/R Inventories Total CA Net fixed assets Net plant and equipment Total Assets Sales COGS EBIT (Opering income) Interest expense EBT (Taxable income) Taxes (40%) Net income Ratio Current ratio Assets Days sales outstanding Inventory turnover Gross profit Fixed operating expenses except depreciation Earnings before interest, taxes, depre and amort (EBITDA) Depreciation Total assets turnover Net profit margin a. Calculate the indicated ratios for Skyline. Return on assets (ROA) Equity multiplier Return on equity (ROE) Debt ratio Balance Sheet as of Dec 31 Skyline 2021 Industry 75,500 330,000 300,500 706,000 315,500 Income Statement for the year ending Dec 31 Current Liabilities Accts payable Notes payable Other current liabilities Total CL Long-term debt Total Liabilities Common Equity 1,021,500 Total Liabilities and Equity Liabilities and Owner's Equity DuPont ROA 2021 1,902,650 (1,538,000) 364,650 (220,000) 144,650 (45,000) 99,650 (52,000) 47,650 (19,060) 28.590 Skyline 2021 155,000 84,000 115,000 354,000 358,500 712,500 309,000 1,021,500 Industry Average DuPont ROE 2.0 X 35 days 5.6 X 3.0 X 1.20% 3.60% b. Construct the DuPont equation for both Skyline and the industry and explain why, compared to industry, - Skyline's ROA is lower in the midst of high NPM Skyline's ROE is higher while ROA is lower 9.00% 2.50 X 60% c. Summarize Skyline's financial position by analyzing its strengths and weaknesses as revealed by your analysis. What action should the company take to improve the financial performance

Managerial Accounting: The Cornerstone of Business Decision-Making
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter15: Financial Statement Analysis
Section: Chapter Questions
Problem 32BEB
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2. Financial statements for Skyline Inc. and industry average financial ratios are shown below. Current Assets Cash A/R Inventories Total CA Net fixed assets Net plant and equipment Total Assets Sales COGS Net income EBIT (Opering income) Interest expense EBT (Taxable income) Taxes (40%) Ratio Current ratio Assets Days sales outstanding Inventory turnover Gross profit Fixed operating expenses except depreciation Earnings before interest, taxes, depre and amort (EBITDA) Depreciation Total assets turnover Net profit margin a. Calculate the indicated ratios for Skyline. Return on assets (ROA) Equity multiplier Return on equity (ROE) Debt ratio Balance Sheet as of Dec 31 Skyline 2021 Industry 75,500 330,000 300,500 706,000 315,500 Income Statement for the year ending Dec 31 1,021,500 Current Liabilities Accts payable Notes payable Other current liabilities Total CL Long-term debt Total Liabilities Common Equity Total Liabilities and Equity Liabilities and Owner's Equity DuPont ROA 2021 1,902,650 (1,538,000) 364,650 (220,000) 144,650 (45,000) 99,650 (52,000) 47,650 (19,060) 28,590 Skyline 2021 155,000 84,000 115,000 354,000 358,500 712,500 309,000 1,021,500 DuPont ROE Industry Average 2.0 X 35 days 5.6 X 3.0 X 1.20% 3.60% b. Construct the DuPont equation for both Skyline and the industry and explain why, compared to industry, - Skyline's ROA is lower in the midst of high NPM Skyline's ROE is higher while ROA is lower 9.00% 2.50 X 60% c. Summarize Skyline's financial position by analyzing its strengths and weaknesses as revealed by your analysis. What action should the company take to improve the financial performance.
Transcribed Image Text:2. Financial statements for Skyline Inc. and industry average financial ratios are shown below. Current Assets Cash A/R Inventories Total CA Net fixed assets Net plant and equipment Total Assets Sales COGS Net income EBIT (Opering income) Interest expense EBT (Taxable income) Taxes (40%) Ratio Current ratio Assets Days sales outstanding Inventory turnover Gross profit Fixed operating expenses except depreciation Earnings before interest, taxes, depre and amort (EBITDA) Depreciation Total assets turnover Net profit margin a. Calculate the indicated ratios for Skyline. Return on assets (ROA) Equity multiplier Return on equity (ROE) Debt ratio Balance Sheet as of Dec 31 Skyline 2021 Industry 75,500 330,000 300,500 706,000 315,500 Income Statement for the year ending Dec 31 1,021,500 Current Liabilities Accts payable Notes payable Other current liabilities Total CL Long-term debt Total Liabilities Common Equity Total Liabilities and Equity Liabilities and Owner's Equity DuPont ROA 2021 1,902,650 (1,538,000) 364,650 (220,000) 144,650 (45,000) 99,650 (52,000) 47,650 (19,060) 28,590 Skyline 2021 155,000 84,000 115,000 354,000 358,500 712,500 309,000 1,021,500 DuPont ROE Industry Average 2.0 X 35 days 5.6 X 3.0 X 1.20% 3.60% b. Construct the DuPont equation for both Skyline and the industry and explain why, compared to industry, - Skyline's ROA is lower in the midst of high NPM Skyline's ROE is higher while ROA is lower 9.00% 2.50 X 60% c. Summarize Skyline's financial position by analyzing its strengths and weaknesses as revealed by your analysis. What action should the company take to improve the financial performance.
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