Below is the data and question that needs answering. Question 15 at the bottom o
ID: 2544680 • Letter: B
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Below is the data and question that needs answering. Question 15 at the bottom of the page is the only question that is needed to be answered. Leave question 12, that is just for the data.
12. Challenge Problem Below are financial statements for Global Manufacturing. After computing the ratios we discussed in this chapter, discuss strong and weak points of Global's performance. DECEMBER 3 ASSETS Cash and marketable securities Accounts receivable Inventories Total current assets Gross plant and equipment Less: accumulated depreciation Net plant and equipment Land Total fixed assets Total assets LIABILITIES AND EQUITY Accounts payable Notes payable Accrued liabilities Total current liabilities 2015 2014 2013 $25,000 100,000 $16,000 80,00056,000 125,000100,00080,000 250,000 200,000152,000 300,000 225,000200,000 75,000-50,000 200,000 150,000150,000 50,00050,000 250,000 200,000 200,000 $500,000 $400,000 $352,000 $20,000 -100,000 50,000 $78,000 $65,000 $58,000 10,000 10,000 25,00025,000 142,000 100,00093,000 34,000 30,000Explanation / Answer
Profitabilty Ratio 2015 2014 Profit Margin ratio 5.1 5.0 % Net Income/sales *100 36000/700000*100 30000/600000*100 Gross profit Margin 35.7 37.5 % Gross profit/sales*100 250000/700000*100 225000/600000*100 Return on Total assets 8.0 8.0 % Net Income/Avg total assets 36000/((500000+400000)/2)*100 30000/((400000+352000)/2)*100 Return on Common stock equity 17.2 15.46 % Net Income/Avg commom stock equity 36000/((218000+200000)/2)*100 30000/((200000+188000)/2)*100 Basic Net Income per common share Common stock $0.72 $0.60 There has beenincraese in profitability in 2015 as compare to 2014 Liquidity Ratio Current Ratio 1.8 2 250000/142000 200000/100000 Quick ratio 0.9 1 Quick assets/CL 125000/142000 100000/100000 Time Interst earned ratio 5.3 6 EBIT/Interest exp 74000/14000 60000/10000 Debt to equity ratio 1.3 1 282000/218000 200000/200000 Efficiency ratios Asset Turnover ratio 1.6 1.6 Sales/Avg assets 700000/((500000+400000)/2) 600000/((400000+352000)/2) Inventory Turnover ratio 4 4.2 COGS/Avg Invtory 450000/((125000+100000)/2) 375000/((100000+80000)/2) Accounts receiv abel turnover ratio sales/Avg Accounts Receivable 7.8 8.8 700000/((180000/2)) 600000/((80000+56000)/2)
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