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REQUIREMENTS: A. Compute for the following ratios: Industry Ratios Company A Company B Company C Standards Current Ratio Receivable Turnover Inventory Turnover 1.95 5.95 4.50

REQUIREMENTS: A. Compute for the following ratios: Industry Ratios Company A Company B Company C Standards Current Ratio Receivable Turnover Inventory Turnover 1.95 5.95 4.50

Entrepreneurial Finance
Entrepreneurial Finance
6th Edition
ISBN:9781337635653
Author:Leach
Publisher:Leach
Chapter9: Projecting Financial Statements
Section: Chapter Questions
Problem 1aM
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REQUIREMENTS: A. Compute for the following ratios: Industry Ratios Company A Company B Company C Standards Current Ratio 1.95 Receivable Turnover 5.95 Inventory Turnover 4.50 Debt Ratio 40% Debt to Equity Ratio Net Profit Margin 45% 8.5% Return on Assets (ROA) 22.5% Return on Equity (ROE) 32.2%
Transcribed Image Text:REQUIREMENTS: A. Compute for the following ratios: Industry Ratios Company A Company B Company C Standards Current Ratio 1.95 Receivable Turnover 5.95 Inventory Turnover 4.50 Debt Ratio 40% Debt to Equity Ratio Net Profit Margin 45% 8.5% Return on Assets (ROA) 22.5% Return on Equity (ROE) 32.2%
An investor was looking at the financial information of the three companies that he would like to invest below: BALANCE SHEET Company A P 1,250,000 Company B P 2,000,000 Company C P 5,500,000 Cash Accounts Receivable 8,000,000 4,000,000 3,000,000 Inventories 12,000,000 20,000,000 12,600,000 Current Assets 21,250,000 26,000,000 21,100,000 Fixed and Other Assets 8,750,000 6,000,000 2,900,000 TOTAL ASSETS 30,000,000 32,000,000 24,000,000 Current Liabilities 10,000,000 5,000,000 4,000,000 Long-term Debt Stockholder's Equity 8,000,000 17,000,000 11,000,000 12,000,000 10,000,000 9,000,000 TOTAL LIABILITIES AND EQUITY 30,000,000 32,000,000 24,000,000 INCOME STATEMENT Sales 50,000,000 80,000,000 60,000,000 Cost of Sales 25,000,000 52,000,000 27,000,000 15,000,000 Operating Expenses Operating Profit 10,000,000 18,000,000 10,000,000 18,000,000 15,000,000 Interest 2,500,000 6,000,000 4,500,000 Taxes (30%) 2,250,000 3,600,000 3,150,000 Net Profit 5,250,000 8,400,000 7,350,000
Transcribed Image Text:An investor was looking at the financial information of the three companies that he would like to invest below: BALANCE SHEET Company A P 1,250,000 Company B P 2,000,000 Company C P 5,500,000 Cash Accounts Receivable 8,000,000 4,000,000 3,000,000 Inventories 12,000,000 20,000,000 12,600,000 Current Assets 21,250,000 26,000,000 21,100,000 Fixed and Other Assets 8,750,000 6,000,000 2,900,000 TOTAL ASSETS 30,000,000 32,000,000 24,000,000 Current Liabilities 10,000,000 5,000,000 4,000,000 Long-term Debt Stockholder's Equity 8,000,000 17,000,000 11,000,000 12,000,000 10,000,000 9,000,000 TOTAL LIABILITIES AND EQUITY 30,000,000 32,000,000 24,000,000 INCOME STATEMENT Sales 50,000,000 80,000,000 60,000,000 Cost of Sales 25,000,000 52,000,000 27,000,000 15,000,000 Operating Expenses Operating Profit 10,000,000 18,000,000 10,000,000 18,000,000 15,000,000 Interest 2,500,000 6,000,000 4,500,000 Taxes (30%) 2,250,000 3,600,000 3,150,000 Net Profit 5,250,000 8,400,000 7,350,000
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