Q: 1. Operating Asset Management Analysis A. Current Ratio Current Assets / Curr

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Q: 1. Operating Asset Management Analysis A. Current Ratio Current Assets / Current Liabilities Heckle Co. 1,520,400 / 544,200 = 2.794 Jackle Co. 2,629,800 / 1,046,000 = 2.514 B. Quick Ratio (Current Assets – Inventories) / Current Liabilities Heckle Co. 890,600 / 544,200 = 1.637 Jackle Co. 1,376,400 / 1,046,000 = 1.316 C. Receivables Turnover Net Credit Sales / Average Accounts Receivable Heckle Co. 12,560,000 / 552,800 = 22.721 Jackle Co. 25,210,000 / 985,400 = 25.584 D. Day’s Sales Uncollected 365 / Receivable Turnover Heckle Co. 16 Day’s Jackle Co. 14 Day’s E. Inventory Turnover Cost of good’s sold / Average Inventory Heckle Co. 6,142,000 / 629,800 = 9.752 Jackle Co. 14,834,000 / 1,253,400 = 11.835 F. Day’s Inventory On Hand 365 / Inventory Turnover Heckle Co. 37 Day’s Jackle Co. 31 Day’s G. Payables Turnover Total Supplier Purchases / Accounts Payable Heckle Co. 6,142,000 / 344,000 = 17.855 Jackle Co. 14,834,000 / 572,600 = 25.906 H. Day’s Payable 365 / Inventory Turnover Heckle Co. 20 Day’s Jackle Co. 14 Day’s I. Financing Period Day’s Inventory Period + Day’s Receivable – Day’s Payable Heckle Co. 33 Day’s Jackle Co. 31 Day’s 2. Profitability And Total Asset Management Analysis A. Profit Margin Net Profit / Sales x 100 Heckle Co. 215,400 / 12,560,000 = 1.715% Jackle Co. 305,800 / 25,210,000 = 1.213% B. Asset Turnover Sales Or Revenue / Total Assets Heckle Co. 12,560,000 / 4,987,200 = 2.518 Jackle Co. 25,210,000 / 9,326,600 = 2.703 C. Return On Assets Net Income / Total Assets Heckle Co. 215,400 / 4,987,200 = 4.319% Jackle Co. 305,800 / 9,326,600 = 3.279% 3. Financial Risk Analysis A. Debt To Equity Ration Total Liabilities / Shareholder Equity Heckle Co. 2,544,200 / 2,443,000 = 1.041 Jackle Co. 6,280,600 / 6,280,600 = 1.000 B. Return On Equity Net Income / Shareholder Equity Heckle Co. 215,400 / 2,443,000 = 8.817% Jackle Co. 305,800 / 6,280,600 = 4.869% C. Investing Coverage Ratio Heckle Co. Jackle Co. 4. Liquidity Analysis A. Cash Flows To Sales Operating Cash Flow / Net Sales Heckle Co. 271,500 / 12,560,000 = 2.162% Jackle Co. 492,500 / 25,210,000 = 1.954% B. Cash Flows To Assets Cash From Operations / Total Assets Heckle Co. 271,500 / 4,987,200 = 5.444% Jackle Co. 492,500 / 9,326,600 = 5.281% C. Free Cash Flows Cash Flow From Operations – Capital Expenditure Heckle Co. (353,500) Jackle Co. (557,500) 5. An Analysis Of Market Strength A. Price / Earnings Ration Market Value Per Share / Earnings Per Share Heckle Co. 60 / 4.3080 = 13.928 Jackle Co. 76 / 10.1933 = 7.456 B. Dividend Yield Annual Dividend Per Share / Price Per Share Heckle Co. 1.0 / 60 = 1.667% Jackle Co. 3.8 / 76 = 5.000%

Which one is better off and why? in depth description

Explanation / Answer

Out of the two Companies, Heckle Co. is doing better than the other i.e. Jackle, because of following points:

a. Return on Equity : Heckle is having much higher return on equity of 8.817% against 4.869% of Jackle. It shows that Heckle is giving higher return to the equity stockholders than the Jackle.

b. Idle Cash : Jackle is having higher asset unused in comparison to Heckle so having less return on the Assets and lower profit and return to equity. Jackle's free cash flow is 557500 in comparison to Heckle whose free cashflow is 353500.

c. Price per Earning : Hackle is having higher Price per every dollar earning against the Jackle. The share market value the earning of Hackle at 13.928 whereas for Jackle the Price/ Earning ratio is 7.456 which is just half of Hackle's P/E ratio.

d. Profit Margin : Last but not the least, the profit margin of Hackle is much better than the Jackle which shows that Hackle has higher future earning prospects than Jackle. The Profit Margin of Hackle is 1.715% in comparison to Jackle whose profit margin is 1.213%.

e. Other parimeters : Looking at the other parimeters, Hackle is showing higher prospects than Jackle.

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