Industry Average Ratios Current ratio Fixed assets turnover Debt-to-capital ratio 20% Total assets turnover Times interest earned 7X Profit margin EBITDA coverage Return on total assets Return on common equity Inventory turnover Days sales outstanding Calculation is based on a 365-day year. 10x 12.86% 24 days Return on invested capital 11.50% Balance Sheet as of December 31, 2018 (Millions of Dollars) Cash and equivalents $ 78 Accounts payable $ 45 Accounts receivable 66 Other current liabilities 11 Inventories 159 Notes payable 29 Total current assets $303 Total current liabilities $ 85 Long-term debt 50 Total liabilities $135 Gross fixed assets 225 Common stock 114 Less depreciation Retained earnings 78 201 Total stockholders equity Total liabilities and equity Net fixed assets $147 $315 Total assets $450 $450 Income Statement for Year Ended December 31, 2018 (Millions of Dollars) Net sales $795.0 Cost of goods sold 660.0 Gross profit $135.0 Selling expenses EBITDA 73.5 $ 61.5 Depreciation expense 12.0 Earnings before interest and taxes (EBIT) 49.5 Interest expense 4.5 Earnings before taxes (EBT) $ 45.0 Taxes (40%) 18.0 Net income $ 27.0

Assuming that the fiscal health of the Health Company is not optimal, explain how Return on Equity (ROE) can help justify paying dividends to shareholders and increasing the company's debts. If Liver Corporation has a lower price/earnings (P/E) ratio than another firm engaged in the same business, what reasons might explain these differences? Describe at least three problems encountered in the analysis of financial indicators. Explain how the DuPont equation can help in analyzing company results.

Give typing answer with explanation and conclusion  _____ 2.) A company has a tax burden ratio of 0.4, a compound leverage factor of 0.6, a return on sales of 0.9, a leverage ratio of 0.7, and an asset turnover of 0.3. What is the ROE for the company?               A.) 2.90%               B.) 4.54%               C.) 6.48%               D.) 11.4%               E.) None of the above

The relationship between financial leverage and profitability Pelican Paper, Inc., and Timberland Forest, Inc., are rivals in the manufacture of craft papers. Some financial statement values for each company follow. Use them in a ratio analysis that compares the firms' financial leverage and profitability. a. Calculate the following debt and coverage ratios for the two companies. Discuss their financial risk and ability to cover the costs in relation to each other. (1) Debt ratio (2) Times interest earned ratio b. Calculate the following profitability ratios for the two companies. Discuss their profitability relative to each other. (1) Operating profit margin (2) Net profit margin (3) Return on total assets (4) Return on common equity c. In what way has the larger debt of Timberland Forest made it more profitable than Pelican Paper? What are the risks that Timberland's investors undertake when they choose to purchase its stock instead of Pelican's? a. The debt ratio for Pelican is %.…

Loreto Inc. has the following financial ratios: asset turnover = 2.40; net profit margin (i.e., net income/sales) = 5%; payout ratio = 30%; equity/assets = 0.40.   a. What is Loreto's sustainable growth rate? b. What is its internal growth rate?

An insurance company’s projected loss ratio is 79.53 percent, and its loss adjustment expense ratio is 7.51 percent. It estimates that commission payments and dividends to policyholders will add another 13.96 percent. What is the minimum yield on investments required in order to maintain a positive operating ratio? (Do not round intermediate calculations. Round your answers to 2 decimal places. (e.g., 32.16))