Assessing a Firms Future Financial Health

Case Study Answer Sheet

Profitability Ratios: income statement 1. 2. 3. 4. 5. 1,307 | 48,769 | 2.68% decrease | 3.60% increase | increase | income tax paid 15,249 | 1,824 | 11.96% | decrease | 14.67% 12,193 | 1,307 | 10.72% | deterioration | 15.22%

Activity Ratios: 1. 2. 3. 4. 5. 48,769 | 22,780 | deteriorated | 2.17 | 2.14 7,380 | 133.614 | 55.23 | improvement | 58.68 8,220 | 29,700 | 3.61 | deterioration | 4.76 5,160 | 48,769 | 9.45 | improvement | 7.98 net profit margin | return on invested capital | return on equity total asset turnover | average collection period | inventory turnover ratio | fixed asset turnover ratio 6. less efficient use of inventory | less efficient use of total assets | increase in COGS as a percentage of sales | increase in operating expenses as a percentage of sales Leverage Ratios: 1. 2. 3. 4. 5. 10,587 | 46.47% | decrease | 48.55% 42.58% 2,528 | 517 | 4.89 | deterioration | 7.12 2,820 | 9.49% | increase | 8.42% | less equity growing faster than net income | increased expenses (COGS and operating) as a percentage of revenues 6. increased Liquidity Ratios: 1. 17,620 | 7,531 | 2.34 | deterioration | 2.41 2. 1.25 | deterioration | 1.52 Unidentified Industries: A. B. C. D. E. Aerospace manufacturer Electric utility Supermarket chain Japanese trading company Automobile manufacturer