5. Using the data in the following table for a number of firms in the same indus

Question

5. Using the data in the following table for a number of firms in the same industry, do the following: %u2022a. Compute the total asset turnover, the net profit margin, the equity multiplier, and the return on equity for each firm. b. Evaluate each firm%u2019s performance by comparing the firms with one another. Which firm or firms appear to be having problems? What corrective action would you suggest the poorer performing firms take? Finally, what additional data would you want to have on hand when conducting your analyses? Firm (in Millions of Dollars) A B C D A B C D sales 20 10 15 25 net income after tax 3 0.5 2.25 3 total asets 15 7.5 15 24 stockholders equity 10 5 14 10 5. Using the data in the following table for a number of firms in the same industry, do the following: %u2022a. Compute the total asset turnover, the net profit margin, the equity multiplier, and the return on equity for each firm. b. Evaluate each firm%u2019s performance by comparing the firms with one another. Which firm or firms appear to be having problems? What corrective action would you suggest the poorer performing firms take? Finally, what additional data would you want to have on hand when conducting your analyses? Firm (in Millions of Dollars) A B C D A B C D sales 20 10 15 25 net income after tax 3 0.5 2.25 3 total asets 15 7.5 15 24 stockholders equity 10 5 14 10

Explanation / Answer

B) performance evaluation

iff we look at performance of firms by comparing net profit margin then firm A and C have same and higest profit margin ratio which is 15% .which shows that they are generating more sprofit margin to firm on the other hand company b is generating very low profit..but if look at aasset turnover ratio then firm b is utilizing its asset well to generate revenue. firm b is generating enough revenue but not profit and firm A performance is much better then any other firm.company C and D are just utilizing its asset to generate revenue.

if we look at levereage ratio then company C leverage ratio is seems to be perfect and generaly less ratio is desired but company D have very high level of debt.overl all looking at all ratios company A is performing good then other

C)

company D is in danger due to such high level of leverage and for survival they much have to reduce its debt becuase it will become dificult for them to meet than high level of intrest and debt repayment

D)

company C can be take as its leverage ratio is ideal and its sales are also hight we can increase its profit margin by cuting cost and increasing prices

for detail anylisis we need financial stamements

Firm A Firm B Firm C Firm D formula Asset turnover sales revenue/total assets 1.33 1.33 1 1.04 Net profit margin net profit/sales revenue 15% 5% 15% 12% Equity multiplier Total assets/equity 1.5 1.5 1.07 2.4

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