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Financial Ratios Current Ratio Quick (Acid) Ratio Total Debt to Total Assets Return on Assets (ROA) Price/Earnings Ratio Industry Values 2.5 times 1.0 times 40% 6% 12.5 times NMC Values 2.3 1.3 40% 9% 11.8

Financial Ratios Current Ratio Quick (Acid) Ratio Total Debt to Total Assets Return on Assets (ROA) Price/Earnings Ratio Industry Values 2.5 times 1.0 times 40% 6% 12.5 times NMC Values 2.3 1.3 40% 9% 11.8

Managerial Accounting: The Cornerstone of Business Decision-Making
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter15: Financial Statement Analysis
Section: Chapter Questions
Problem 52E: Juroe Company provided the following income statement for last year: Juroes balance sheet as of...
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What should NMC do to improve its position in the market?

Thousands of dollars (except stock NMC Corporation Income Statement for the Calendar Year (January 1- December 31) NMC Corporation Balance Sheet (Average of beginning (thousands of and end of year) Assets Liabilities and Equity price, earnings per share, and dividends per share) (thousands of dollars) dollars) Net sales Cost and expenses: EBIT Less interest expense: $3,000 $2,734 $266 $50 Accounts payable soNotes payable $350 Accrued Wages Cash $60 Market securities $100 $10 $130 Accounts receivable $66 Inventories Total Current Assets: $300 Accrued Taxes S700 Total Current Liabilities: $1,300 Total Long Term Debt: $300 $800 Earnings before taxes $200 Taxes 80 Net plant and equipment: Net income before preferred dividends $120 Total Stock Holder's Equity: $900 Dividends to preferred stockholders S8 Total Assets: $2,000 Total liabilities and equity: $2,000| Net income available to common stock S112 holders NMC Values 2.3 1.3 Industry Values 2.5 times Per share common stock: Financial Ratios Stock Price Earnings per share Dividends per share $26.50 Current Ratio Quick (Acid) Ratio Total Debt to Total Assets S2.24 1.0 times $1.84 40% 40% Return on Assets (ROA) Price/Earnings Ratio 6% 12.5 times 9% 11.8 CR= Current Assets/CurrentLiabilities QR= Current Assets - Inventory/CurrentLiabilities DA= Total Debt/Total Assets NIAT = Earnings before taxes - taxes ROA= NIAT/Assets NMC should To improve its position in the market. EPS= NIAT/number of shares common stock P/E= Market Price/EPS
Transcribed Image Text:Thousands of dollars (except stock NMC Corporation Income Statement for the Calendar Year (January 1- December 31) NMC Corporation Balance Sheet (Average of beginning (thousands of and end of year) Assets Liabilities and Equity price, earnings per share, and dividends per share) (thousands of dollars) dollars) Net sales Cost and expenses: EBIT Less interest expense: $3,000 $2,734 $266 $50 Accounts payable soNotes payable $350 Accrued Wages Cash $60 Market securities $100 $10 $130 Accounts receivable $66 Inventories Total Current Assets: $300 Accrued Taxes S700 Total Current Liabilities: $1,300 Total Long Term Debt: $300 $800 Earnings before taxes $200 Taxes 80 Net plant and equipment: Net income before preferred dividends $120 Total Stock Holder's Equity: $900 Dividends to preferred stockholders S8 Total Assets: $2,000 Total liabilities and equity: $2,000| Net income available to common stock S112 holders NMC Values 2.3 1.3 Industry Values 2.5 times Per share common stock: Financial Ratios Stock Price Earnings per share Dividends per share $26.50 Current Ratio Quick (Acid) Ratio Total Debt to Total Assets S2.24 1.0 times $1.84 40% 40% Return on Assets (ROA) Price/Earnings Ratio 6% 12.5 times 9% 11.8 CR= Current Assets/CurrentLiabilities QR= Current Assets - Inventory/CurrentLiabilities DA= Total Debt/Total Assets NIAT = Earnings before taxes - taxes ROA= NIAT/Assets NMC should To improve its position in the market. EPS= NIAT/number of shares common stock P/E= Market Price/EPS
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