Given the data below (assets & liabilities for 2016 and 2015), answer all fields
ID: 2561781 • Letter: G
Question
Given the data below (assets & liabilities for 2016 and 2015), answer all fields in yellow:
Assets Cash and cash equivalents Short-term investments Accounts Receivable nventories $21,000$20,000 3,240 48,000 3,759 $161,259 $127,240 218400 200.000 $379 659 327240 Total current assets Net fxed assets Total assets Liabilities and equity Accounts payable Accruals Notes payable $33,600 $32,000 12,600 12,000 $66,129$50,480 766258320 $133,791 $108,800 183,793 178,440 62.075 40.000 $245 868 $218440 $379 659 327240 Total current labilities Long-term debt Total liabilities Common stock Retained Earnings Total common equity Total liabilities and equity Joshua & White Technologies December 31 Income Statements Thousands of Dollars) 2016 420,000 $400,000 COGS except excluding depr. and amort 300,000 298,000 18,000 27600 22.000 $72,740 $62,000 Deprecation and Amortization 19,660 Other operating expenses Interest Expense Taxes (40%) EBIT EBT Net Income $67,000 $57,540 26.800 23016 $40 200 $34524 Common dividends Addition to retained eanings $18,125$17,262 $22,075 $17.262 Other Data Year-end Stock Price # of shares Thousands) Lease payment (Thousands of Dollars) Sinking fund payment (Thousands of Doll $30.00 4,000 $20,000 $20,000 $5,000$5,000 4,052Explanation / Answer
Answer 1
ratio analysis
2016
2015
industry Average
liquidity ratio
current ratio (current asset/current liability)
2.44
2.52
2.58
quick ratio [(current asset-inventory/current liability]
1.17
1.41
1.53
Joshua & white's liquidity position washed compare to industry ratio. Current ratio and quick ratio for 2016 is lower compared to 2015. Its means company liquidity position worse compare to previous year.
Answer 2
Ratio analysis
2016
2015
Industry average
Assets management ratio
Inventory turnover (total COGS/inventories)
3.57
5.32
7.69
Days sales outstanding [(account receivable*360 days)/sales] ( 1 year = 360 days considered)
45.00
43.20
47.45
Fixed assets turnover ratio (sales/fixed assets)
1.92
2.00
2.04
Total assets turnover ratio (sales/total assets)
1.11
1.22
1.23
Inventory turnover of company is lower compared to industry. It means company hold stock for longer time compared to industry limit. Higher inventory turnover ratio also harmful because of higher inventory ratio impact on ordering cost should be increase.
Collection period from account receivable in 2016 is 45 days where in previous years 43.20, it means company collection period will increase, so, debtors management system become worsted compared to previous year. But account receivable period in 2016 (45 days) is goods compared to industry average (47.45 days)
Fixed assets turnover ratio decrease compared to year 2015. It means company's efficiency level in its using fixed assets to produce sales become worsted. Ratio of 2016 also worsted compare to industry average ratio.
Total assets turnover ratio decrease compared to year 2015. It means company's efficiency level in its using total assets to produce sales become worsened. Ratio of 2016 (1.11) also worsened compare to industry average ratio (1.23).
Efficiency for management of assets is worsted in 2016.
Answer 3
Ratio analysis
2016
2015
Industry average
Profitability ratio
Profit margin [(net income/sales)*100]
9.57%
8.63%
8.86%
Basic earning power (EBIT/total assets)
19.16%
18.95%
19.48%
Return on assets (net income/ total asset)
10.59%
10.55%
10.93%
Return on equity [(net income/ total common equity)*100]
16.35%
15.80%
16.10%
Profit margin of company improved in 2016 (9.57%) compared to previous year's profit margin.
Basic earning power, return on assets and return on equity are improved during year 2016. it means company profitability improved during 2016 compared to year 2015.
Answer 4
Du point analysis
2016
2015
Remarks
Profit margin ( net revenue/ sales
9.57%
8.63%
Company profit margin increase compared to previous year.
Asset turnover ratio (revenue /assets)
1.11
1.22
Company assets turnover ratio decrease compared to previous year.
Equity multiplier (asset/equity)
1.5442
1.4981
Equity multiplier of company also improves.
Return on equity (multiply of above ratio)
16.35%
15.80%
Due to decrease in assets turnover ratio. Return on equity increase just minor. Otherwise .return of equity may be possible to improve at very good level. Now company requires to more focusing on asset turnover ratio.
As per our policy, we can’t able to post answer of more than 4 sub parts of question.
ratio analysis
2016
2015
industry Average
liquidity ratio
current ratio (current asset/current liability)
2.44
2.52
2.58
quick ratio [(current asset-inventory/current liability]
1.17
1.41
1.53
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