You are a financial consultant. You are hired by a manufacturing company to assess its performanceBased on financial ratios. Your task is to come up with the following: (1) financial analysis using financial ratioson liquidity, solvency or stability, and profitability; (2) trend analysis, both vertical and horizontal; and (3)comparative financial statements. The analysis should be benchmarked with competitors.Frepare a report indicating your comments on the financial health and performance of the companyturenchmarked with competitors) using the following liquidity ratios: (1) current ratio, (2) receivableturnover, (3) inventory turnover, and (4) quick ratio.competitors) using the following ratios: (1) debt ratio, (2) times interest earned ratio, and (3) debt- equityratio.Give your insights into the relative solvency or stability of the company (as benchmarked with theAlso, assess the relative profitability of the company (as benchmarked with competitors) using thefollowing ratios: (1) gross profit margin, (2) net profit margin, (3) return on assets, and (4) return on equity.Compare the resulting ratios of P and P Manufacturing Company for 2018 (per your computation)with its competitors in the table given below.Competitor C4.5:13.625:17 times5.3 times0.075:10.825:12.6 times38.5%14.5%16%12%P&P Mfg. Co.9.31:16.9:1Competitor B6:14.25:120 timesFinancial Ratios for 2018Current RatioQuick ratioReceivable TurnoverInventory TurnoverDebt Ratio18.9 times7.8 times0.15:10.17:18.6 timesDebt-equity RatioTimes Interest Earned RatioGross Profit Margin RatioNet Profit Margin RatioReturn on AssetsReturn on Equity0.2:11,75:14.5 times51.2%22.5%24%22%3.4 times49.4%17.6%26.9%31.5%Conduct a trend analysis (horizontal) for the company over the current and last two years based onComparative SFP.Aside from the horizontal analysis, conduct also a vertical analysis (common-size financialstatements). Comment on the components of the financial statements by year and its trend for the last threeyears.P and P Manufacturing CompanyComparative Statements of Financial PositionAs of 31 December 2018, 2017, and 2016In PesoAccount201820172016P215,000.00130,000.000.00P581, 970.00686,725.00450,470.00225,000.00845,000.00854,500.00P3,643,665.00P184,620.00350,000.003,109,045.00P3,643,665.00P290,000.00340,000.00270,000.00225,000.00895,000.00825,000.00P2,845,000.00P165,000.00550,000.002,130,000.00P2,845,000.00CashAccounts ReceivableInventories350,000.00945,000.00290,000.00P1,930,000.00P200,000.00750,000.00980,000.00P1,930,000.00LandBuildings, NetEquipment, NetTotal AssetsAccounts PayableLong-term DebtCapital StockLiabilitiesandTotalShareholders' Equity

Financial Ratios There are different types of ratio which are used to measure the strength and…

mparative financial statements. The analysis should be benchmarked with competitors. or stability, and pre pare a report indicating your comments on the financial health and performance of Denchmarked with competitors) using the following liquidity ratios: (1) current ratio, nover, (3) inventory turnover, and (4) quick ratio. Give your insights into the relative solvency or stability of the company (as benchmark mpetitors) using the following ratios: (1) debt ratio, (2) times interest earned ratio, and (3 tio. Also, assess the relative profitability of the company (as benchmarked with competito ets and (4) r

mparative financial statements. The analysis should be benchmarked with competitors. or stability, and pre pare a report indicating your comments on the financial health and performance of Denchmarked with competitors) using the following liquidity ratios: (1) current ratio, nover, (3) inventory turnover, and (4) quick ratio. Give your insights into the relative solvency or stability of the company (as benchmark mpetitors) using the following ratios: (1) debt ratio, (2) times interest earned ratio, and (3 tio. Also, assess the relative profitability of the company (as benchmarked with competito ets and (4) r

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter3: Evaluation Of Financial Performance

Section: Chapter Questions

Problem 5P

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You are a financial consultant. You are hired by a manufacturing company to assess its performance Based on financial ratios. Your task is to come up with the following: (1) financial analysis using financial ratios on liquidity, solvency or stability, and profitability; (2) trend analysis, both vertical and horizontal; and (3) comparative financial statements. The analysis should be benchmarked with competitors. Prepare a report indicating your comments on the financial health and performance of the company (as benchmarked with competitors) using the following liquidity ratios: (1) current ratio, (2) receivable turnover, (3) inventory turnover, and (4) quick ratio. Give your insights into the relative solvency or stability of the company (as benchmarked with the competitors) using the following ratios: (1) debt ratio, (2) times interest earned ratio, and (3) debt - equity ratio, Also, assess the relative profitability of the company (as benchmarked with competitors) using the…
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