Homework Help is Here – Start Your Trial Now!
Business
Accounting
Calculate the projected inventory turnover, days sales outstanding (DSO), fixed assets turnover, and total assets turnover. How does Abiproffy's utilization of assets stack up against other firms in its industry? Calculate the projected current and quick ratios based on the projected balance sheet and income statement data. What can you say about the company's liquidity position and its trend? Calculate the projected debt ratio, the debt-to-equity ratio, liabilities-to-assets ratio, earnings multiplier, times-interest-earned, and EBITDA coverage ratios. How does Abiproffy compare with the industry with respect to financial leverage? What can you conclude from these ratios? Calculate the projected price/earnings ratio and market/book ratio. Do these ratios indicate that investors are expected to have a high or low opinion of the company? It is commonly recommended that the managers of a firm compare the performance of their firm to that of its peers. Increasingly, this is becoming a more difficult task. Explain some of the reasons why comparisons of this type can frequently be either difficult to perform or produce misleading results.

Calculate the projected inventory turnover, days sales outstanding (DSO), fixed assets turnover, and total assets turnover. How does Abiproffy's utilization of assets stack up against other firms in its industry? Calculate the projected current and quick ratios based on the projected balance sheet and income statement data. What can you say about the company's liquidity position and its trend? Calculate the projected debt ratio, the debt-to-equity ratio, liabilities-to-assets ratio, earnings multiplier, times-interest-earned, and EBITDA coverage ratios. How does Abiproffy compare with the industry with respect to financial leverage? What can you conclude from these ratios? Calculate the projected price/earnings ratio and market/book ratio. Do these ratios indicate that investors are expected to have a high or low opinion of the company? It is commonly recommended that the managers of a firm compare the performance of their firm to that of its peers. Increasingly, this is becoming a more difficult task. Explain some of the reasons why comparisons of this type can frequently be either difficult to perform or produce misleading results.

Financial Accounting Intro Concepts Meth/Uses
Financial Accounting Intro Concepts Meth/Uses
14th Edition
ISBN:9781285595047
Author:Weil
Publisher:Weil
Chapter7: Introduction To Financial Statement Analysis
Section: Chapter Questions
Problem 14E
See similar textbooks
icon
Related questions
Question

2. Calculate the projected inventory turnover, days sales outstanding (DSO), fixed assets turnover, and total assets turnover. How does Abiproffy's utilization of assets stack up against other firms in its industry?

  1. Calculate the projected current and quick ratios based on the projected balance sheet and income statement data. What can you say about the company's liquidity position and its trend?
  2. Calculate the projected debt ratio, the debt-to-equity ratio, liabilities-to-assets ratio, earnings multiplier, times-interest-earned, and EBITDA coverage ratios. How does Abiproffy compare with the industry with respect to financial leverage? What can you conclude from these ratios?
  3. Calculate the projected price/earnings ratio and market/book ratio. Do these ratios indicate that investors are expected to have a high or low opinion of the company?
  4. It is commonly recommended that the managers of a firm compare the performance of their firm to that of its peers. Increasingly, this is becoming a more difficult task.
    Explain some of the reasons why comparisons of this type can frequently be either difficult to perform or produce misleading results.
Week 2 Knowledge Check Financial Statements provide an overview of the company's operating results. Well-managed companies use their operating cash flows in different ways, including capital expenditures, acquisitions, dividend payments, stock repurchases, and saving for future needs. Which company made the right choices? Investors and managers use financial ratios to analyze financial statements. To this end, some of the techniques used are trend analysis, common size analysis, and percentage change analysis. In addition, the financial ratios of a company are tied together in the DuPont Equation. Finally, the ratios are used to compare with other companies in the same industry. Abiproffy company entered an expansion program and encounter a large loss in 2019, rather than the expected profit. As a result, its managers, directors, and investors are concerned about the firm's survival. James Brown was brought in as assistant to Abiproffy's chairman, who had the task of getting the company back into a sound financial position. Brown must prepare an analysis of where the company is now, what it must do to regain its financial health, and what actions to take. Your assignment is to help him answer the following questions. Provide clear explanations, not yes or no answers. Use the recent and projected financial information attached and answer the questions below. 1. Calculate the projected profit margin, operating profit margin, basic earning power (BEP), return on assets (ROA), and return on equity (ROE). What can you say about these ratios? 2. Calculate the projected inventory turnover, days sales outstanding (DSO), fixed assets turnover, and total assets turnover. How does Abiproffy's utilization of assets stack up against other firms in its industry? 3. Calculate the projected current and quick ratios based on the projected balance sheet and income statement data. What can you say about the company's liquidity position and its trend? 4. Calculate the projected debt ratio, the debt-to-equity ratio, liabilities-to-assets ratio, earnings multiplier, times-interest-earned, and EBITDA coverage ratios. How does Abiproffy compare with the industry with respect to financial leverage? What can you conclude from these ratios? 5. Calculate the projected price/earnings ratio and market/book ratio. Do these ratios indicate that investors are expected to have a high or low opinion of the company? 6. It is commonly recommended that the managers of a firm compare the performance of their firm to that of its peers. Increasingly, this is becoming a more difficult task. Explain some of the reasons why comparisons of this type can frequently be either difficult to perform or produce misleading results. Balance Sheets Assets Cash and equivalents Short-term investments Accounts receivable Inventories Total current assets Net Fixed Assets Total Assets Liabilities and equity Accounts payable 2018 $ 60 100 400 620 $1,180 2,900 $4,080 2018 $ 300 2019 $ 50 10 520 820 $1,400 3,500 $4,900 2019 $ 400 2020E $ 60 50 530 660 $1,300 3.700 $5,000 2020E $ 330
Transcribed Image Text:Week 2 Knowledge Check Financial Statements provide an overview of the company's operating results. Well-managed companies use their operating cash flows in different ways, including capital expenditures, acquisitions, dividend payments, stock repurchases, and saving for future needs. Which company made the right choices? Investors and managers use financial ratios to analyze financial statements. To this end, some of the techniques used are trend analysis, common size analysis, and percentage change analysis. In addition, the financial ratios of a company are tied together in the DuPont Equation. Finally, the ratios are used to compare with other companies in the same industry. Abiproffy company entered an expansion program and encounter a large loss in 2019, rather than the expected profit. As a result, its managers, directors, and investors are concerned about the firm's survival. James Brown was brought in as assistant to Abiproffy's chairman, who had the task of getting the company back into a sound financial position. Brown must prepare an analysis of where the company is now, what it must do to regain its financial health, and what actions to take. Your assignment is to help him answer the following questions. Provide clear explanations, not yes or no answers. Use the recent and projected financial information attached and answer the questions below. 1. Calculate the projected profit margin, operating profit margin, basic earning power (BEP), return on assets (ROA), and return on equity (ROE). What can you say about these ratios? 2. Calculate the projected inventory turnover, days sales outstanding (DSO), fixed assets turnover, and total assets turnover. How does Abiproffy's utilization of assets stack up against other firms in its industry? 3. Calculate the projected current and quick ratios based on the projected balance sheet and income statement data. What can you say about the company's liquidity position and its trend? 4. Calculate the projected debt ratio, the debt-to-equity ratio, liabilities-to-assets ratio, earnings multiplier, times-interest-earned, and EBITDA coverage ratios. How does Abiproffy compare with the industry with respect to financial leverage? What can you conclude from these ratios? 5. Calculate the projected price/earnings ratio and market/book ratio. Do these ratios indicate that investors are expected to have a high or low opinion of the company? 6. It is commonly recommended that the managers of a firm compare the performance of their firm to that of its peers. Increasingly, this is becoming a more difficult task. Explain some of the reasons why comparisons of this type can frequently be either difficult to perform or produce misleading results. Balance Sheets Assets Cash and equivalents Short-term investments Accounts receivable Inventories Total current assets Net Fixed Assets Total Assets Liabilities and equity Accounts payable 2018 $ 60 100 400 620 $1,180 2,900 $4,080 2018 $ 300 2019 $ 50 10 520 820 $1,400 3,500 $4,900 2019 $ 400 2020E $ 60 50 530 660 $1,300 3.700 $5,000 2020E $ 330
Notes payable Accruals Total current liabilities Long-term bonds Total liabilities Common stock (100,000 shares) Retained earnings Total common equity Total liabilities and equity Income Statements Net sales Cost of goods sold (Excluding depr.) Depreciation Other operating expenses Earnings before interest and taxes (EBIT) Less interest Pre-tax earnings Taxes (25%) Net Income Other Data Per Share Information EPS DPS Book Value Per Share Additional Information Dividends Additions to retained earnings Year-end shares outstanding Year-end common stock price Lease payments Tax rate 50 200 2018 2019 $5,500 $6,000 4,300 4,800 290 320 350 420 $ 560 $ 460 68 108 $ 492 $ 352 88 123 $369 $ 264 Note: "E" denotes the "estimated forecast." Also, Abiproffy has no amortization. M $ 550 800 $1,350 1,000 1.730 $2,730 $4,080 Note: "E" denotes the "estimated forecast." 2018 $3.69 $0.90 $27.30 $90 $279 100 $50.00 $20 25% 250 240 $ 890 27 __1,100 $1,990 1,000 1,910 $2.910 $4.900 2019 $2.64 $0.84 $29.10 $84 $180 100 $30.00 $20 25% 2020E $6,600 5,210 370 400 $ 620 _100 $ 520 130 $ 390 2020E $3.90 $1.00 $32.00 $100 $290 100 $49.00 $20 25% 100 270 $ 700 1.100 $1,800 1,000 2.200 $3.200 $5,000
Transcribed Image Text:Notes payable Accruals Total current liabilities Long-term bonds Total liabilities Common stock (100,000 shares) Retained earnings Total common equity Total liabilities and equity Income Statements Net sales Cost of goods sold (Excluding depr.) Depreciation Other operating expenses Earnings before interest and taxes (EBIT) Less interest Pre-tax earnings Taxes (25%) Net Income Other Data Per Share Information EPS DPS Book Value Per Share Additional Information Dividends Additions to retained earnings Year-end shares outstanding Year-end common stock price Lease payments Tax rate 50 200 2018 2019 $5,500 $6,000 4,300 4,800 290 320 350 420 $ 560 $ 460 68 108 $ 492 $ 352 88 123 $369 $ 264 Note: "E" denotes the "estimated forecast." Also, Abiproffy has no amortization. M $ 550 800 $1,350 1,000 1.730 $2,730 $4,080 Note: "E" denotes the "estimated forecast." 2018 $3.69 $0.90 $27.30 $90 $279 100 $50.00 $20 25% 250 240 $ 890 27 __1,100 $1,990 1,000 1,910 $2.910 $4.900 2019 $2.64 $0.84 $29.10 $84 $180 100 $30.00 $20 25% 2020E $6,600 5,210 370 400 $ 620 _100 $ 520 130 $ 390 2020E $3.90 $1.00 $32.00 $100 $290 100 $49.00 $20 25% 100 270 $ 700 1.100 $1,800 1,000 2.200 $3.200 $5,000
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 8 steps with 5 images

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Knowledge Booster
Divisional performance management
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
Recommended textbooks for you
Financial Accounting Intro Concepts Meth/Uses
Financial Accounting Intro Concepts Meth/Uses
Finance
ISBN:
9781285595047
Author:
Weil
Publisher:
Cengage
Financial Accounting: The Impact on Decision Make…
Financial Accounting: The Impact on Decision Make…
Accounting
ISBN:
9781305654174
Author:
Gary A. Porter, Curtis L. Norton
Publisher:
Cengage Learning
Managerial Accounting
Managerial Accounting
Accounting
ISBN:
9781337912020
Author:
Carl Warren, Ph.d. Cma William B. Tayler
Publisher:
South-Western College Pub
Financial And Managerial Accounting
Financial And Managerial Accounting
Accounting
ISBN:
9781337902663
Author:
WARREN, Carl S.
Publisher:
Cengage Learning,
Fundamentals of Financial Management, Concise Edi…
Fundamentals of Financial Management, Concise Edi…
Finance
ISBN:
9781285065137
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Financial Reporting, Financial Statement Analysis…
Financial Reporting, Financial Statement Analysis…
Finance
ISBN:
9781285190907
Author:
James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher:
Cengage Learning
SEE MORE TEXTBOOKS