PLEASE INSERT THE EXCEL FORMULAS BESIDE THE ANSWER !! THANK YOU. Instructions -

Question

PLEASE INSERT THE EXCEL FORMULAS BESIDE THE ANSWER !! THANK YOU.

Instructions - Use the financials below to calculate all of the ratios listed on the Part 1 tab. In the comments column, explain what the difference in the ratio indicates between Armstrong and Blair using Armstrong as the reference point. For example, for Profit Margin, the answer would read "Armstrong profit per sales dollar (either higher or lower) than Blair" in Column F of the ratio sheet. Be sure to label answers, ie %, times, days on columns C and E. Percentages could be formatted with th number 2016 Armstrong Company Blair Company Assets Cash Accounts Receivable, Net Inventory Total Current Assets Property and Equipment, net Other Assets 35,000 40,000 100,000 175,000 180,000 45,000 22,000 30,000 40,000 92,000 300,000 408,000 Total Assets 400,000 800,000 Liabilities Current Liabilities Long Term Debt Total Liabilities 100,000 60,000 160,000 50,000 370,000 420,000 Shareholders' Equity Common Stock (par $10) Additional Paid in Capital Retained Earnings Total Shareholders' Equity 150,000 30,000 60,000 240,000 200,000 110,000 70,000 |380,000 Total Laibilites and Shareholders' Equity 400,000 800,000 Shares Outstanding 15,000 20,000 Revenue (1/3 are credit sales) Cost of Goods Sold Gross Profit Expenses Net Income 450,000 | 245,000 |205,000 | 160,000 45,000 810,000 405,000 405,000 |315,000 | 90,000 Select Data from 2015 Accounts Receivable, Net Inventory Property and Equipment, net Long Term Debt Total Shareholders' Equity 20,000 92,000 180,000 60,000 231,000 38,000 45,000 300,000 70,000 440,000 Estimated value of each share at end of 18 27

Explanation / Answer

Particulars Arm strong Blair comments

Profit Margin   net profit/sales   45000/450000=10% 90000/810000=11.11% Profit margin is

Higher in Blair than arm strong.

Gross Margin Gross margin/sales 205000/450000=45.55% 405000/810000=50% as contribution towards net profit is higher in Blair than arm strong.

Assets Turnover TO/Assets   450000/400000    810000/800000 since utilization of assets is =1.125 times =1.0125 more than Blair in Armstrong.

Fixed Assets TO/ Fixed Assets 450000/180000 810000/300000 Usage of fixed assets for =2.5 times =2.7 times the organization is more in Blair than in arm strong.

Day sales Race Receivables/Credit sales 40000/450000 30000/270000 As Day sales receivables is =26.67 days =11.11 days lower in Blair it shows that revenue on credit sales is recognized on an average of 11 days in Blair.

Inventory TO (COGS/Sales)/Inventory 245000/100000 405000/40000 Inventory turnover ratio is =2.45 times =10.125 times higher in Blair shows that inventory rotation is higher.

Day sales Inventory 365days/Invent TO   365/2.45 365/10.125 Day sales inventory is better in =148.97 days =36.049 days Blair than arm strong.

Current Ratio   CA/CL 175000/100000 92000/50000 Current assets is better in Blair =1.75 =1.84 than arm strong.

Quick ratio   (CA-Inventory)/CL 750000/100000 52000/50000 Quick ratio is better in Blair than =0.75 =1.04 arm strong.

Debt to Assets Total Liabilities/Total Assets   160000/400000 420000/800000 Debt to assets is lower in arm =0.4 =0.525 strong comparative to Blair.

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