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Please help with the case study comprehensive question for 5-36. Pictures Below.

You are the loan officer at QIB responsible for determining whether BBCCs business is strong enough to be able to repay the5-36. Bikini Bottom Construction Company (BBCC) manufactures various types of high- quality punching and deep-drawing press tSee BBCC Case on pages 110 and 111 in your text (problem 5-36) On page 111 complete items: ai – xii. ALSO, construct a Common

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Answer #1

Those ratios which use average in calculation, ending total balance has been considered as no information was provided for 2016.

gross profit margin (gross profit / sales)*100
2017 ($) 2018 ($)
gross proft 20000 22000
sales 40909 45000
gross profit margin 48.9% 48.9%
On comparing with the industry (50%), it has declined. It has remained stable for both the periods
operating profit margin (operating profit / sales)*100
2017 ($) 2018 ($)
operating profit 6182 6000
sales 40909 45000
operating profit margin 15.1% 13.3%
On comparing with the industry (15%), it has remained stable for 2017 but declined for 2018. It's deteriorating in 2018.
net profit margin (net income / sales)*100
2017 ($) 2018 ($)
net income 4336 4191
sales 40909 45000
net profit margin 10.6% 9.3%
On comparing with the industry (8%), it is doing better. It's deteriorating in 2018.
return on assets net income / ending total assets
2017 ($) 2018 ($)
net income 4336 4191
ending total assets 30000 33620
return on assets 14.5% 12.5%
On comparing with the industry (10%), it is doing better. It's deteriorating in 2018.
return on equity net income / shareholders equity
2017 ($) 2018 ($)
net income 4336 4191
shareholders equity 18000 20620
return on equity 24.1% 20.3%
On comparing with the industry (20%), it is was better in 2017 but remained stable in 2018. It's deteriorating in 2018.
current ratio current assets / current liabilities
2017 ($) 2018 ($)
current assets:
cash 2000 1800
accounts receivable 6000 7600
inventory 5000 5220
total current assets 13000 14620
current liabilities:
accounts payable 2000 2600
notes payable 3000 3300
accrued expenses 3000 3100
total current liabilities 8000 9000
current ratio 1.6 1.6
On comparing with the industry (1.5), it is was better. It remained stable for both the periods.
quick ratio acid-assets / current liabilities
2017 ($) 2018 ($)
acid assets
cash 2000 1800
accounts receivable 6000 7600
total acid assets 8000 9400
total current liabilities 16000 18800
quick ratio 0.5 0.5
On comparing with the industry (1.5), it is was worse for both the periods. No changes in both the periods
debt to total assets total debt / total assets
2017 ($) 2018 ($)
debt:
notes payable 3000 3300
bonds payable 4000 4000
total debt 7000 7300
ending total assets 30000 33620
debt to total assets 0.2 0.2
On comparing with the industry (0.5), it was worse for both the periods. No changes in both the periods
times interest earned EBIT / interest expense
2017 ($) 2018 ($)
EBIT 6182 6000
interest expenses 400 412
times interest earned 15.5 14.6
On comparing with the industry (25), it was worse for both the periods. It's deteriorating in 2018.
average collection period (ending accounts receivable / sales)*365
2017 ($) 2018 ($)
ending accounts receivable 6000 7600
sales 40909 45000
average collection period 54 62
On comparing with the industry (45 days), it was worse for both the periods. It's deteriorating in 2018.
inventory turnover cost of goods sold / ending inventory
2017 ($) 2018 ($)
cost of goods sold 20909 23000
ending inventory 5000 5220
inventory turnover 4.2 4.4
On comparing with the industry (8), it was worse for both the periods. No significant change in 2018.
total assets turnover sales / ending total assets
2017 ($) 2018 ($)
sales 40909 45000
ending total assets 30000 33620
total assets turnover 1.4 1.3
On comparing with the industry (1.6), it was low for both the periods. No significant change in 2018.
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