Ratio analysis the Corrigan Corporation’s 2004 and 2005 financial statements follow, along with some industry average ratios.

Ratio analysis the Corrigan Corporation’s 2004 and 2005 financial statements follow, along with some industry average ratios.

Assess Corrigan’s liquidity position, and determine how it compares with peers and how the liquidity position has changed over time.

Assess Corrigan’ asset management position, and determine how it compares with peers and how its asset management efficiency has changed over time.

Assess Corrigan’s debt management position, and determine hoe it compares with peers and how its debt management has changed over time.

Assess Corrigan’s profitability ratios, and determine how they compare with peers and how the profitability position has changed over time.

Assess Corrigan’s market value ratios, and determine hoe their valuation compares with peers and how it has changed over time.

Calculate Corrigan’s ROE, as well as the industry averages, ROE, using the extended pare with the industry average numbers?

What do you thing would happen to its ratios if the company initiated cost-cutting measures that allowed it to hold lower levels of inventory and substantially decreased the cost of goods sold?  No calculations are necessary.  Think about which ratios would be affected by changes in these two accounts.

Corrigan Corporation:  Balance Sheets as of December 31

                                                                                                2005                         2004

Cash                                                                                        72,000                     65,000

Accounts receivable                                                                439,000                  328,000

Inventories                                                                               894,000                  813,000

Total current assets                                                                  1,405,000             1,206,000

Land and building                                                                      238,000               271,000

Machinery                                                                                  132,000               133,000

Other fixed assets                                                                         61,000                 57,000

Total assets                                                                                1,836,000             1,667,000

Accounts and notes payable                                                         432,000             409,000

Accrued liabilities                                                                         170,000            162,000

   Total current liabilities                                                               602,000            571,500

Long –term debt                                                                            404,290            258,898

Common stock                                                                              575,000             575,000

Retained earnings                                                                          254,710             261,602

Total liabilities and equity                                                          1,836,000          1,667,000