Case Study: Abington-Hill Toys
Title: Abington-Hill Toys, Inc
Part I. Introduction Abington-Hill Toys, Inc has been assigned a new president Vernon Albright due to the death of Lewis Hill. The financial condition slowly deteriorated as Mr. Hill was running the company’s final years. Mr. Albright was brought in because the founders of the companies did not have a son or daughter that was willing to the take on the role of the new president. Mr. Albright took it upon him to take the leadership role and began to seek opinions from the outside of the firm to regain the financial stability that the company needed. David Hartly was brought on to be the assistant comptroller. He took his duties very serious and his first task was to
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Debt Ratio: (290,000+200,000)/ 1,200,000=40.58% h. Times Interest Earned: 126,000/ 39,600=3.1% i. Gross Profit Margin: 300,000/ 1,200,000=25.5% j. Net Profit Margin: 60,480/ 1,200,000=5.1% k. Return On Total Assets=126,000/ 1,200,000 =10.50% l. Return On Net Worth=60,480/ 910,000 =6.65% m. Z-score= 1.2X1 + 1.4X2 + 3.3X3 + 0.6X4 + 1X5 X1= (280,000-290,000)/ 1,200,000= -0.007 X2= (60,480-200,000)/ 1,200,000= -0.114 X3= 126,000/ 1,200,000= 0.105 X4= (200,000)/ (290,000 + 200,000) = 0.407 X5= 1,200,000/ 1,200,000= 1 Z= 1.2(-0.008) +1.4(-0.116) +3.3(0.105) +0.6(0.408) +1(1) = 1.42 Part IV. Conclusion a. Current ratio is known as the company’s ability to pay back their debits and obligations. The current ratio of .98 which is under 1 means the company would not be able to pay of the obligations that it owes. This shows the company is not in good standing and will cause more risk, if invested into. b. Acid Ratio is known as the firm’s ability to measure the amount of pay back of short term liabilities. With the ratio of .412, this tells us that the firm is no condition to come up with the funds needed. c. Average collection period is known to be the amount of days on average the company takes to collect their funds. It is defined as the amount of time taken to pay a current sale. The day that Abington hill takes is about 60 days, which seems to be on track. d. Inventory turnover is

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