fin

A firm has been experiencing low profitability in recent years. Perform an analysis of the firm’s financial position using the extended Du Pont equation. The most recent industry average ratios and the firm’s financial statements are as follows:
Balance Sheet as of December 31, 2008 (In Millions)
Assets:
Cash                                                                                                                     $  78
Accounts receivable                                                                                                 66
Inventories                                                                                                              159
  Total current assets                                                                                              $303
Gross fixed assets                                                                                                    225
  Less depreciation                                                                                                     78
Net fixed assets                                                                                                        147
Total assets                                                                                                           $450
Liabilities and equity:
Accounts payable                                                                                                   $ 45
Notes payable                                                                                                           45
Other current liabilities                                                                                               21
  Total current liabilities                                                                                        $  111
Long-term bonds                                                                                                       24
Common equity                                                                                                       315
Total liabilities and equity                                                                                      $450
Income Statement for year Ended December 31, 2008 (In Millions)
Sales                                                                                                                     $795
Cost of goods sold (excluding depreciation and amortization)                               733.5
  EBITDA                                                                                                                 $61.5
Depreciation and amortization                                                                                  12
  Earnings before interest and taxes                                                                       $49.5
Interest                                                                                                                       4.5
  Earnings before taxes                                                                                         $ 45
Taxes (40%)                                                                                                             18
Net income available to common stockholders                                                    $  27
a. Calculate the indicated ratios for this firm. (2 points)
Ratio                                                                                                  Firm          Industry Average
Total assets turnover                                                                                  3.0x
Net profit margin                                                                                        3%
ROE                                                                                                         12.9%
Total debt / total assets                                                                              30%
b. Construct the extended Du Pont equation for this firm and the industry. (1 points)
c. Identify the ratio that seems to be primarily responsible for the low profits and suggest possible ways to improve. (1 points)
Approximate price: $22
We value our customers and so we ensure that what we do is 100% original..

With us you are guaranteed of quality work done by our qualified experts.Your information and everything that you do with us is kept completely confidential.You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.The Product ordered is guaranteed to be original. Orders are checked by the most advanced anti-plagiarism software in the market to assure that the Product is 100% original. The Company has a zero tolerance policy for plagiarism.The Free Revision policy is a courtesy service that the Company provides to help ensure Customer’s total satisfaction with the completed Order. To receive free revision the Company requires that the Customer provide the request within fourteen (14) days from the first completion date and within a period of thirty (30) days for dissertations.The Company is committed to protect the privacy of the Customer and it will never resell or share any of Customer’s personal information, including credit card data, with any third party. All the online transactions are processed through the secure and reliable online payment systems.By placing an order with us, you agree to the service we provide. We will endear to do all that it takes to deliver a comprehensive paper as per your requirements. We also count on your cooperation to ensure that we deliver on this mandate.