Week 4 - Joe’s Fly-By-Night Oil Company - Ratio analysis

the following for Joe’s Fly-By-Night Oil Company, whose financial statements are shown below:

Joe’s Fly-By-Night Oil Company

NET INCOME $1,800

Addition to retained earnings $1,200

Total assets $40,000

Prepare a ratio analysis for the fiscal year ended Dec 31, 2011.  Organize your analysis per the following outline:

   (1) Liquidity

            - Current ratio

            - Quick ratio

        Comments on liquidity

   (2) Asset management

            - Total Asset turnover

            - Average collection period (ACP)

        Comments on asset management

   (3) Debt management

            - Debt ratio

            - Times interest earned

        Comments on debt management

   (4) Profitability

            - Net profit margin

            - Return on Assets (ROA)

            - Return on Equity (ROE)

            - Extended Du Pont equation

        Comments on profitability to include your comments on the sources of ROE

        revealed by the Du Pont equation

   (5) Market value ratios

            - PE ratio

            - Market to book ratio

     Comments on the market value ratios

     For the purposes of this exercise, assume the following data for Joe’s Fly-By-Night Oil:

                  Stock price on Dec 31, 2011…$50.00

                  Number of common shares outstanding on Dec 31, 2011...1,000