Use Dylex Corporation's financial statements to compute the
below ratios. Compared to the industry averages provided in the
question data determine if the ratio is favourable or unfavourable.
Also select the ratio type it represents.
Please make sure your final answer(s) are accurate to 2 decimal
places and don't use percentages. For your analysis, assume that
all other things have remained constant. Apply your analysis in
very general terms.
Ratio | 2015 | Industry Average | Favourable/Unfavourable | Ratio Type |
Days' sales in inventory | 4.42 | |||
Days' sales uncollected | 7.12 | |||
Inventory turnover | 63.3 | |||
Book value per common share | 35.82 | |||
Equity ratio | 0.6 |
Balance Sheet | ||
Assets | 2015 | 2014 |
Cash | 16600 | 16200 |
Short-term investments | 37000 | 39000 |
Accounts receivable, net | 23700 | 21200 |
Inventory | 13800 | 12400 |
Prepaid insurance | 2900 | 3200 |
Notes receivable, due in 2018 | 9000 | 10000 |
Plant assets, net | 575000 | 419550 |
Total assets | 678000 | 521550 |
Liabilities and Shareholders' Equity | ||
Accounts payable | 20800 | 26400 |
Salaries payable | 9800 | 13100 |
Property taxes payable | 23000 | 24850 |
Long-term notes payable | 142000 | 168000 |
Common shares, issued 50,000 shares | 280000 | 280000 |
Retained earnings | 202400 | 9200 |
Total liabilities and shareholders' equity | 678000 | 521550 |
Income Statement | ||
2015 | 2014 | |
Net sales (on credit) | 1539900 | 1212300 |
Cost of goods sold | 1109500 | 749300 |
Gross profit from sales | 430400 | 463000 |
Operating expenses | 170000 | 163800 |
Income from operations | 260400 | 299200 |
Interest expense | 4250 | 4600 |
Income before taxes | 256150 | 294600 |
Income taxes | 41500 | 62000 |
Net income | 214650 | 232600 |
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Dylex Company | ||
Statement of Earnings | 2015 | 2014 |
Sales | 1,539,900.00 | 1,212,300.00 |
Cost of goods sold | 1,109,500.00 | 749,300.00 |
Gross Margin | 430,400.00 | 463,000.00 |
Operating Expenses | 170,000.00 | 163,800.00 |
Income from operations | 260,400.00 | 299,200.00 |
Interest Expense | 4,250.00 | 4,600.00 |
Income before taxes | 256,150.00 | 294,600.00 |
Income taxes | 41,500.00 | 62,000.00 |
Net Income | 214,650.00 | 232,600.00 |
Common Dividends | 350,000.00 | 455,700.00 |
Net Income Retained | (135,350.00) | (223,100.00) |
Beginning Retained Earnings | 1,290,000.00 | 834,300.00 |
Ending Retained Earnings | 1,154,650.00 | 611,200.00 |
Statement of Financial Position | ||
Assets | 2015 | 2014 |
Current Assets | ||
Cash | 16,600.00 | 16,200.00 |
Short-term investments | 37,000.00 | 39,000.00 |
Accounts Receivable (Net) | 23,700.00 | 21,200.00 |
Inventory | 13,800.00 | 12,400.00 |
Prepaid Expense | 2,900.00 | 3,200.00 |
Total Current Assets | 94,000.00 | 92,000.00 |
Notes receivable, due in 2018 | 9,000.00 | 10,000.00 |
Plant assets, net | 575,000.00 | 419,550.00 |
Total Assets | 678,000.00 | 521,550.00 |
Liabilities & Stockholders' Equity | 2015 | 2014 |
Liabilities | ||
Accounts payable | 20,800.00 | 26,400.00 |
Salaries payable | 9,800.00 | 13,100.00 |
Property taxes payable | 23,000.00 | 24,850.00 |
Current Liabilities | 53,600.00 | 64,350.00 |
Long-term notes payable | 142,000.00 | 168,000.00 |
Total Liabilities | 195,600.00 | 232,350.00 |
Stockholders' Equity | ||
Common shares, issued 50,000 shares | 280,000.00 | 280,000.00 |
Retained Earnings | 202,400.00 | 9,200.00 |
Total Stockholders' Equity | 482,400.00 | 289,200.00 |
Total Liabilities & Stockholders' Equity | 678,000.00 | 521,550.00 |
2015 | 2014 | |
Accounts Receivable (Net) | 23,700.00 | 21,200.00 |
Average Accounts Receivable | 22,450.00 | |
Inventory | 13,800.00 | 12,400.00 |
Average Inventory | 13,100.00 |
Ratios | 2015 | Industry Average | Remarks | Ratio Type |
Inventory turnover | ||||
Cost of goods sold/ Average Inventory | 84.69 | 63.30 | Favorable because it is higher than industry average. | It is an activity ratio. |
Days' sales in inventory | ||||
365/ Inventory turnover | 4.31 | 4.42 | Favorable because it is lower than industry average. | It is an activity ratio. |
Accounts Receivable turnover | ||||
Sales/ Average Accounts Receivable | 68.59 | It is an activity ratio. | ||
Days' sales uncollected | ||||
365/ Accounts Receivable turnover | 5.32 | 7.12 | Favorable because it is lower than industry average. | It is an activity ratio. |
Book value per common share | ||||
Total Stockholders' Equity/ Number of common shares | 9.65 | 35.82 | Unfavorable because it is lower than industry average. | It is a financial ratio. |
Equity ratio | ||||
Total Stockholders' Equity/ Total Assets | 0.7 | 0.6 | Favorable because it is higher than industry average. | It is a leverage ratio. |
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