A company has positive NPV, IRR 21% & payback 3.15 yrs. By using the following financial ratios how the company financial feasibility and give the suggestions for future growth.
Homework Answers
Answer: Ratio Analysis- Ratios are the indicators of company, ratio analysis provides financial and liquidity position of the company in short.
Ratio analysis of the Company:
Current ratio- This is the liquidity measure of company. If we see the ratios from 2019 to 2023, we see that current ratio is increasing, Higher current ratio is good for company.
Quick ratio- This is also a liquidity measure, company's quick ratio is expected to increase in the coming years as well that is showing, company will maintain its liquidity position.
Account receivable turnover ratio- This ratio tells the number of times, a company collects the payment from its customers. Company is maintaining a stable ratio in all throughout the coming years that is good.
Inventory turnover ratio- This ratio tells the number of times, inventory is sold in a given period. If we see the figures, we see that in 2021, 2022 because of heavy inventories but in 2023, it is the highest.
Debt ratio- This ratio tells the relationship between total liabilities and total assets, this ratio is decreasing in the coming years so it is a good sign, company is repaying its previous debt and debt is decreasing. Less debt is good because it decreases the obligation.
Debt-Equity ratio- This ratio tells the relationship between total liabilities and total equity. The ratio is expected to come down because debt is coming down, it is a good sign for company. Lower debt is good.
Gross, Operating and Net profit margin- These ratios tell the profitability of the company, if we analyse these ratios, we see that all three ratios are expected to increase in upcoming years that is a good sign for company, company will maintain its profitability in upcoming years as well.
ROA & ROE- These are profitability measures. ROA and ROE are going up in 2020 and 2021 but in 2022 and 2023, they are decreasing because net income is increasing with lower percentage.
Conclusion- Overall financial health of company is good, company will do well in future also, it is a growing company whose sales and profit are increasing and it is able to maintain sound liquidity position. Its activity position is also good, business will do good in future. Company is also cutting debt in its capital structure in the future that is a good sign.
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A company has positive NPV, IRR 21% & payback 3.15 yrs. By
using the following financial...
The following financial information is for Cullumber Company. Problem 13-04A The following financial information is for...
The following financial information is for Cullumber
Company.
Problem 13-04A The following financial information is for Cullumber Company. CULLUMBER COMPANY Balance Sheets December 31 Assets 2022 Cash $ 72,000 Debt investments (short-term) 51,000 Accounts receivable 109,000 Inventory 237,000 Prepaid expenses 28,000 Land 131,000 Building and equipment (net) 259,000 Total assets $887,000 Liabilities and Stockholders' Equity Notes payable $169,000 Accounts payable 69,000 Accrued liabilities 41,000 Bonds payable, due 2025 252,000 Common stock, $10 par 209,000 Retained earnings 147,000 Total liabilities and...
The following financial information is for Crane Company. CRANE COMPANY Balance Sheets December 31 Assets 2022...
The following financial information is for Crane Company. CRANE COMPANY Balance Sheets December 31 Assets 2022 2021 Cash $ 71,000 $ 69,000 Debt investments (short-term) 50,000 41,000 Accounts receivable 107,000 92,000 Inventory 234,000 162,000 Prepaid expenses 29,000 23,000 Land 135,000 135,000 Building and equipment (net) 261,000 187,000 Total assets $887,000 $709,000 Liabilities and Stockholders’ Equity Notes payable $169,000 $106,000 Accounts payable 66,000 54,000 Accrued liabilities 42,000 42,000 Bonds payable, due 2025 250,000 171,000 Common stock, $10 par 203,000 203,000 Retained...
Problem 13-04A The following financial information is for Blossom Company. BLOSSOM COMPANY Balance Sheets December 31...
Problem 13-04A The following financial information is for Blossom Company. BLOSSOM COMPANY Balance Sheets December 31 Assets 2022 Cash $ 72,000 Debt investments (short-term) 54,000 Accounts receivable 109,000 Inventory 235,000 Prepaid expenses 26,000 Land 134,000 Building and equipment (net) 259,000 Total assets $889,000 Liabilities and Stockholders' Equity Notes payable $170,000 Accounts payable 66,000 Accrued liabilities 41,000 Bonds payable, due 2025 249,000 Common stock, $10 par 198,000 Retained earnings 165,000 Total liabilities and stockholders' equity $889,000 2021 $ 67,000 39,000 92,000...
GS&H had the following information on its financial statements for the fiscal years ended December 31....
GS&H had the following information on its financial statements for the fiscal years ended December 31. All figures are in millions of Canadian dollars. Current assets Current liabilities Net sales Accounts receivable - gross Allowance for doubtful accounts 2023 $1.634 629 3,940 1,456 168 2022 $6,036 2.181 10.342 934 34 2021 $3,850 1,276 5.778 746 17 2020 $1,495 980 4,404 565 14 Calculate the following for the company: (1) (2) (3) current ratio for 2020 through 2023 receivable turnover ratio...
Financial statements for Askew Industries for 2021 are shown below (in thousands): 2021 Income Statement Net...
Financial statements for Askew Industries for 2021 are shown below (in thousands): 2021 Income Statement Net sales $ 9,900 Cost of goods sold (6,525) Gross profit 3,375 Operating expenses (2,325) Interest expense (290) Income tax expense (384) Net income $ 456 Comparative Balance Sheets Dec. 31 2021 2020 Assets Cash Accounts receivable Inventory Property, plant, and equipment (net) $ 690 690 890 2,900 $5,170 $ 590 490 690 3,000 $4,770 Liabilities and Shareholders' Equity Current liabilities Bonds payable Common stock...
PROJECT: Select any bank / firm of your choice. Take out its financial statements. Calculate the...
PROJECT:
Select any bank / firm of your choice. Take out its financial
statements.
Calculate the following ratios according to the information
found in these statements.
(NOTE: Show your workings)
1. Operating Cycle. Inventory Number of days of inventory - Average day's cost of goods sold Inventory cost of goods sold / 305 Number of days of receivables = Accounts receivable Average day's sales on credit Accounts receivable Sales on credit / 365 Number of days of payables - Accounts...
PROJECT: Select any bank / firm of your choice. Take out its financial statements. Calculate the...
PROJECT:
Select any bank / firm of your choice. Take out its financial
statements.
Calculate the following ratios according to the information
found in these statements.
(NOTE: Show your workings)
1. Operating Cycle. Inventory Number of days of inventory - Average day's cost of goods sold Inventory cost of goods sold / 305 Number of days of receivables = Accounts receivable Average day's sales on credit Accounts receivable Sales on credit / 365 Number of days of payables - Accounts...
Q-2 FINANCIAL RATIO FORMULAS Match each of the following financial ratios with its formula: Accounts Payable...
Q-2 FINANCIAL RATIO FORMULAS Match each of the following financial ratios with its formula: Accounts Payable Tunover Ratio Fixed Asset Turnover Ratio Asset Turnover Ratio Cash Coverage Ratio Cash Ratio Current Ratio Average Age of Receivables Average Days Supply in Inventory Receivable Turnover Ratio Debt-to-Equity Ratio Earnings per Share (EPS) Financial Leverage Percentage Times Interest Earned Ratio Inventory Turnover Ratico Price/ Earnings (P/E) Ratio Profit Margin Quality of Income Quick Ratio Return on Equity (ROE) Return on Assets (ROA) A....
ORIOLE COMPANY Balance Sheets December 31 Assets 2022 2021 $ 69,000 $ 65,000 Cash Debt investments...
ORIOLE COMPANY Balance Sheets December 31 Assets 2022 2021 $ 69,000 $ 65,000 Cash Debt investments (short-term) 55,000 40,000 Accounts receivable 109,000 89,000 168,000 Inventory 239,000 23,000 26,000 Prepaid expenses Land 129,000 129,000 Building and equipment (net) 264,000 186,000 $888,000 $703,000 Total assets Liabilities and Stockholders' Equity $169,000 $109,000 Notes payable Accounts payable 66,000 52,000 42,000 42,000 Accrued liabilities Bonds payable, due 2025 251,000 170,000 Common stock, $10 par 204,000 204,000 156,000 Retained earnings 126,000 $888,000 $703,000 Total liabilities and...
Financial statements for Askew Industries for 2021 are shown below in thousands 2021 Income Statement Net...
Financial statements for Askew Industries for 2021 are shown below in thousands 2021 Income Statement Net sales $ 8,700 Cost of goods sold (6,075) Gross profit 2,625 Operating expenses (1,875) Interest expense (110) Income tax expense (256) Net income 384 Comparative Balance Sheets Dec. 31 2021 2020 Assets Cash Accounts receivable Inventory Property, plant, and equipment (net) $ 510 510 710 1,100 $2,830 $ 410 310 510 1,200 $2,430 Liabilities and Shareholders' Equity Current liabilities Bonds payable Common stock Retained...
The following financial information is for Cullumber
Company.
Problem 13-04A The following financial information is for Cullumber Company. CULLUMBER COMPANY Balance Sheets December 31 Assets 2022 Cash $ 72,000 Debt investments (short-term) 51,000 Accounts receivable 109,000 Inventory 237,000 Prepaid expenses 28,000 Land 131,000 Building and equipment (net) 259,000 Total assets $887,000 Liabilities and Stockholders' Equity Notes payable $169,000 Accounts payable 69,000 Accrued liabilities 41,000 Bonds payable, due 2025 252,000 Common stock, $10 par 209,000 Retained earnings 147,000 Total liabilities and...
Problem 13-04A The following financial information is for Blossom Company. BLOSSOM COMPANY Balance Sheets December 31 Assets 2022 Cash $ 72,000 Debt investments (short-term) 54,000 Accounts receivable 109,000 Inventory 235,000 Prepaid expenses 26,000 Land 134,000 Building and equipment (net) 259,000 Total assets $889,000 Liabilities and Stockholders' Equity Notes payable $170,000 Accounts payable 66,000 Accrued liabilities 41,000 Bonds payable, due 2025 249,000 Common stock, $10 par 198,000 Retained earnings 165,000 Total liabilities and stockholders' equity $889,000 2021 $ 67,000 39,000 92,000...
GS&H had the following information on its financial statements for the fiscal years ended December 31. All figures are in millions of Canadian dollars. Current assets Current liabilities Net sales Accounts receivable - gross Allowance for doubtful accounts 2023 $1.634 629 3,940 1,456 168 2022 $6,036 2.181 10.342 934 34 2021 $3,850 1,276 5.778 746 17 2020 $1,495 980 4,404 565 14 Calculate the following for the company: (1) (2) (3) current ratio for 2020 through 2023 receivable turnover ratio...
Financial statements for Askew Industries for 2021 are shown below (in thousands): 2021 Income Statement Net sales $ 9,900 Cost of goods sold (6,525) Gross profit 3,375 Operating expenses (2,325) Interest expense (290) Income tax expense (384) Net income $ 456 Comparative Balance Sheets Dec. 31 2021 2020 Assets Cash Accounts receivable Inventory Property, plant, and equipment (net) $ 690 690 890 2,900 $5,170 $ 590 490 690 3,000 $4,770 Liabilities and Shareholders' Equity Current liabilities Bonds payable Common stock...
PROJECT:
Select any bank / firm of your choice. Take out its financial
statements.
Calculate the following ratios according to the information
found in these statements.
(NOTE: Show your workings)
1. Operating Cycle. Inventory Number of days of inventory - Average day's cost of goods sold Inventory cost of goods sold / 305 Number of days of receivables = Accounts receivable Average day's sales on credit Accounts receivable Sales on credit / 365 Number of days of payables - Accounts...
PROJECT:
Select any bank / firm of your choice. Take out its financial
statements.
Calculate the following ratios according to the information
found in these statements.
(NOTE: Show your workings)
1. Operating Cycle. Inventory Number of days of inventory - Average day's cost of goods sold Inventory cost of goods sold / 305 Number of days of receivables = Accounts receivable Average day's sales on credit Accounts receivable Sales on credit / 365 Number of days of payables - Accounts...
Q-2 FINANCIAL RATIO FORMULAS Match each of the following financial ratios with its formula: Accounts Payable Tunover Ratio Fixed Asset Turnover Ratio Asset Turnover Ratio Cash Coverage Ratio Cash Ratio Current Ratio Average Age of Receivables Average Days Supply in Inventory Receivable Turnover Ratio Debt-to-Equity Ratio Earnings per Share (EPS) Financial Leverage Percentage Times Interest Earned Ratio Inventory Turnover Ratico Price/ Earnings (P/E) Ratio Profit Margin Quality of Income Quick Ratio Return on Equity (ROE) Return on Assets (ROA) A....
ORIOLE COMPANY Balance Sheets December 31 Assets 2022 2021 $ 69,000 $ 65,000 Cash Debt investments (short-term) 55,000 40,000 Accounts receivable 109,000 89,000 168,000 Inventory 239,000 23,000 26,000 Prepaid expenses Land 129,000 129,000 Building and equipment (net) 264,000 186,000 $888,000 $703,000 Total assets Liabilities and Stockholders' Equity $169,000 $109,000 Notes payable Accounts payable 66,000 52,000 42,000 42,000 Accrued liabilities Bonds payable, due 2025 251,000 170,000 Common stock, $10 par 204,000 204,000 156,000 Retained earnings 126,000 $888,000 $703,000 Total liabilities and...
Financial statements for Askew Industries for 2021 are shown below in thousands 2021 Income Statement Net sales $ 8,700 Cost of goods sold (6,075) Gross profit 2,625 Operating expenses (1,875) Interest expense (110) Income tax expense (256) Net income 384 Comparative Balance Sheets Dec. 31 2021 2020 Assets Cash Accounts receivable Inventory Property, plant, and equipment (net) $ 510 510 710 1,100 $2,830 $ 410 310 510 1,200 $2,430 Liabilities and Shareholders' Equity Current liabilities Bonds payable Common stock Retained...
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