Is the estimate of $35 to $40 for Owen’s shares a fair evaluation? Explain. Type a three- to four-sentence response below.Ratio Type20122013Current (times)3.403.43Quick (times)2.181.83Debt (%)37.65%35.31%Times interest earned (times)8.5011.61Inventory turnover (times)6.994.79Total asset turnover (times)2.782.71Average collections period (days)50.1450.99Return on equity (%)11.6010.81 EXHIBIT C2.1 KF Income Statements: 2012–201320122013Sales$6,572,800$7,811,5005,866,200Cost of goods soldGross margin4,896,700$ 1,676,100$1,945,300Administrative1,281,7001,492,200DepreciationEarnings before interest and taxes72,000$ 322,40086,000$ 367,10031,600$ 335,500Interest37,900$ 284,500Earnings before taxesTaxes (at 40%)113,800134,200$ 170,700$ 201,300Net incomeEXHIBIT C2.2 KF Balance Sheets: 2012–201320122013Assets$ 300,000$ 915,000$ 700,000$ 36,200$ 1,951,200$ 340,000($ 135,000)$ 205,000$2,361,200$ 244,000$1,106,600$1,222,300$ 46,800CashAccounts receivableInventoryOther currentCurrent assets$2,619,700$ 493,600($ 233,800)$ 259,800Gross fixed assetsAccumulated depreciationNet fixed assetsTotal assets$2,879,500Liabilities and Net Worth$ 345,700$ 63,200$ 164,300$ 573,200$ 316,000$ 948,000$ 524,000$2,361,200$ 544,800$ 63,200$ 156,100$ 764,100$ 252,800$ 1,137,600$ 725,000$2,879,500Accounts payableNotes payableAccrualsCurrent liabilitiesLong-term debtCommon stock (62,000 shares outstanding)Retained earningsTotal liabilities and net worth EXHIBIT C2.3 Financial Ratios for the Electronic Arts IndustryIndustry AveragesCurrent (times)2.6/1.7/1.3Quick (times)1.6/0.8/0.6Debt %41/57/71Times interest earned (times)7.4/3.9/1.3Inventory turnover (times)Total asset turnover (times)8.1/6.0/3.53.5/2.8/2.0Average collection period (days)Return on equity %41/50/6827.3/19.5/7.8* Third quartile, median, and first quartile results

Analysis of Ratios based on given figures is as below On analysis of the given ratios $35 to $40…

Answered: $35 to $40

Business

Finance

$35 to $40

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter12: Fainancial Statement Analysis

Section: Chapter Questions

Problem 52CE: Asset Efficiency Ratios Selected financial statement numbers for Rutherford Company follow....

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Twenty metrics of liquidity, solvency, and profitability The comparative financial statements of Automotive Solutions Inc. are as follows. The market price of Automotive Solutions Inc. common stock was $119.70 on December 31, 20Y8 Instructions Ratio of fixed assets to long-term liabilities
Unusual income statement items Assume that the amount of each of the following items is material to the financial statements. Classify each item as either normally recurring (NR) or unusual (U) items. If unusual item, then specify if it is a discontinued operations item (DO). a. Interest revenue on notes receivable. b. Gain on sale of segment of the company's operations that manufactures bottling equipment. c.Loss on sale of investments in stocks and bonds. d. Uncollectible accounts expense. e. Uninsured flood loss. (Hood insurance is unavailable because of periodic Hooding in the area.)
Asset Efficiency Ratios Selected financial statement numbers for Rutherford Company follow. Required: 1. Using this information, calculate Rutherfords receivable turnover ratio (rounded to two decimal places.) 2. Using this information, calculate Rutherfords asset turnover ratio (rounded to two decimal places) and also convert the ratio into days (rounded to the nearest whole day).
GIVE AN INTERPRETATION OF THESE RATIOS CONCLUSIVELY Acid test ratio = (total current asset – inventory – prepaid expenses) / total current liability Total asset turnover = 1.918 times Gearing ratio = 0.2243 or 22.43% Gross profit margin = 0.361 or 36.1% Net profit margin = 0.1143 or 11.43% Return on capital employed = 0.2664 or 26.64% Current ratio = 2.1753 times Acid test ratio = 1.0413 times Receivables days = (Trade Receivables/Net Sales) * 365 = (74480/768400) *365 = 36 days Payables days = (Trade Payables/ Net Purchases) * 365 = (72000/460400) *365 = 58 days Inventory Days = (Inventory/ Cost of goods sold) * 365 = (84000/476400) * 365 = 65 days Gross Profit Margin (GPM) = 292000/808800*100= 36.10% Net Profit Margin (NPM) = 92480/808800 *100 = 11.43% Return on Capital Employed (ROCE) = 92480/327080*100 = 28.27% Current ratio = 162280/74600= 2.17 Acid test ratio = (162280- 84000)/74600= 1.049 Total asset turnover = Sales revenue / Total average asset…
Current Attempt in Progress XYZ provided the following financial information: XYZBalance SheetAs of 12/31/19 Assets: Liabilities and Equity: Cash and marketable securities $27,476 Accounts payable and accruals $154,860 Accounts receivable $143,519 Short-term notes payable $21,255 Inventory $212,379 Total current liabilities $176,115 Total current assets $383,374 Long term debt $155,510 Net plant and equipment $602,704 Total liabilities $331,625 Goodwill and other assets $42,422 Common stock $312,719 Retained earnings $384,156 Total assets $1,028,500 Total liabilities and equity $1,028,500 In addition, it was reported that the firm had a net income of: $158,402 and net sales of: $4,272,431 Calculate the following ratios for this firm (Use 365 days for calculation. Round answers to 2 decimal places, e.g.…
Compare the performance of Fly X to the Industry. For each ratio, comment on whether Fly X is positive or negative relative to the Industry. Median Industry Fly X Ratios Current Ratio 1.43X 1.45 Quick Ratio 0.84X 0.88 Total Asset Turnover Ratio 0.85 1.30 Inventory Turnover Ratio 6.15 12.10 Average Inventory Ratio 59.35 30.17 Receivables Turnover 9.82 13.08 Average Collection Period 37.17 27.90 Debt Ratio 0.52 0.39
Given:Avarege trade receivables of afirm is40.000,average finished goodsis 50.000, cost of goods sold is 200000 and net sales is 250.000. Whatis trade receivables turnover? a. 250.000/40.000b. 40.000/ 200.000c. 40.000/250.000d. 200.000/ 40.000==========5. Activity Ratios are used in the assessment ofa) The financial risk of the companyb) the profitability of the assetsc) the short term debt repayment capacity of the firmd)the efficiency of the asset or the source analyzed
XYZ provided the following financial information: XYZBalance SheetAs of 12/31/19 Assets: Liabilities and Equity: Cash and marketable securities $27,476 Accounts payable and accruals $154,860 Accounts receivable $143,519 Short-term notes payable $21,255 Inventory $212,379 Total current liabilities $176,115 Total current assets $383,374 Long term debt $155,510 Net plant and equipment $602,704 Total liabilities $331,625 Goodwill and other assets $42,422 Common stock $312,719 Retained earnings $384,156 Total assets $1,028,500 Total liabilities and equity $1,028,500 In addition, it was reported that the firm had a net income of: $158,402 and net sales of: $4,272,431 Calculate the following ratios for this firm (Use 365 days for calculation. Round answers to 2 decimal places, e.g. 52.75.): Current Ratio ? times…
Given:Avarege trade receivables of afirm is40.000,average finished goodsis 50.000, cost of goods sold is 200000 and net sales is 250.000. Whatis trade receivables turnover? a. 250.000/40.000 b. 40.000/ 200.000 c. 40.000/250.000 d. 200.000/ 40.000 ========== 5. Activity Ratios are used in the assessment ofa) The financial risk of the companyb) the profitability of the assetsc) the short term debt repayment capacity of the firm d)the efficiency of the asset or the source analyzed
Given the following information for the Vanderbilt Tire Company, find ROA (Return on Assets): Debt ratio (D/A) = 0.33 (expressed as a decimal) Total asset turnover ratio (S/A) = 1.88 Sales (S) = $10,000 Net profit margin = 0.08 (expressed as a decimal)
Resolve and explain the result of the current ratio for XYZ Company and compare andexplain this result with the Industry average, where current liabilities = $581,000 andcurrent assets = $832,000. a. Resolve the current ratio for XYZ Company b.Explain the result of the current ratio for XYZ Company c.Compare and explain the result of the current ratio for XYZ Company with the Industryaverage.
Calculate the following for Co. XYZ: c. Average collection period (365 days) d. Times interest earned Assets: Cash and marketable securities $400,000Accounts receivable 1,415,000Inventories 1,847,500Prepaid expenses 24,000Total current assets $3,686,500Fixed assets 2,800,000Less: accumulated depreciation 1,087,500Net fixed assets $1,712,500Total assets $5,399,000Liabilities: Accounts payable $600,000Notes payable 875,000Accrued taxes Total current liabilities $1,567,000Long-term debt 900,000Owner's equity Total liabilities and owner's equity Co. XYZ Income Statement: Net sales (all credit) $6,375,000Less: Cost of goods sold 4,375,000Selling and administrative expense 1,000,500Depreciation expense 135,000Interest expense Earnings before taxes $765,000Income taxes Net income Common stock dividends $230,000Change in retained earnings

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Ratio Type	2012	2013
Current (times)	3.40	3.43
Quick (times)	2.18	1.83
Debt (%)	37.65%	35.31%
Times interest earned (times)	8.50	11.61
Inventory turnover (times)	6.99	4.79
Total asset turnover (times)	2.78	2.71
Average collections period (days)	50.14	50.99
Return on equity (%)	11.60	10.81