5 of 84 Score: 0 of 14 pts Problem 4-9 (similar to) (Ratio analysis) Using Pampl

Question

5 of 84 Score: 0 of 14 pts Problem 4-9 (similar to) (Ratio analysis) Using Pamplin Inc.'s financial statements shown in the popup window: BE a. Compute the ratios in the popup window, EEB,for 2014 and 2015 to compare both against the industry norms. b. How liquid is the firm? c. Are its managers generating an adequate operating profit on the firm's assets? d. How is the firm financing its assets? e. Are its managers generating a good return on equity? Note: 15% of sales are cash sales, with the remaining 85% being credit sales. a. Compute the following ratios for 2014 and 2015 to compare both against the industry norms. (Round the numbers to two decimal places and select your evaluation from the drop-down menu.) 2014 2015 Evaluation Industry Nornm 5.00x Enter your answer in the edit fields and then click Check Answer Clear Al remaining

Explanation / Answer

Ratios Formula 2014 2015 Current ratio =Current Assets/Current Liabilities =1203/203 =1198/300 Acide test ratio =(Current assets - stocks)/Current liabilities =(1203-551)/203 =(1198-625)/300 Inventory turnover ratio =COGS/Inventory =704/551 =848/625 Average Collection period (Days) 365/(Sales/Accounts recievables) =365/(1201/454) =365/(1455/425) Debt Ratio =(Short term debt + Long term debt)/ Total Asset =601/2405 =(146+601)/2601 Times interest earned =EBITDA/Interest expense =(250+217)/45 =(366+200)/63 Total Assets Turnover =Revenue/Total Assets =1201/2405 =1455/2601 Fixed Assets Turnover =Revenue/Fixed Assets =1201/1202 =1455/1403 Operating profit margin =Operating profit / Revenue =250/1201 =366/1455 ROE (Return on Equity) =Net Income/Total Equity =123/1601 =182/1700 Ratios Formula 2014 2015 Current ratio =Current Assets/Current Liabilities 5.9x 4.0x Acide test ratio =(Current assets - stocks)/Current liabilities 3.2x 1.9x Inventory turnover ratio =COGS/Inventory 1.3x 1.4x Average Collection period (Days) 365/(Sales/Accounts recievables) 138 107 Debt Ratio =(Short term debt + Long term debt)/ Total Asset 0.2x 0.3x Times interest earned =EBITDA/Interest expense 10.4x 9.0x Total Assets Turnover =Revenue/Total Assets 49.94% 55.94% Fixed Assets Turnover =Revenue/Fixed Assets 99.92% 103.71% Operating profit margin =Operating profit / Revenue 20.82% 25.15% ROE (Return on Equity) =Net Income/Total Equity 7.68% 10.71%

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