Financial Accounting Help for Martin.
Druid001
wip.docxThe questions provide specifically what is required.
19. What is the objective of financial statement analysis from the standpoint of an investor? Provide a brief explanation. (10 Points)
20. Financial ratio data is listed below for Crazy A's Horse Trailers. Explain how the company is performing from a liquidity, efficiency, cash flow and leverage perspective. Please provide a brief explanation for each perspective using at least 2 ratios you think is appropriate for each category. (15 Points)
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Crazy A's Horse Trailers Ratios |
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Ratio |
Industry |
2012 |
2011 |
2010 |
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Current |
1.20x |
1.18x |
1.20x |
1.35x |
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Quick |
0.20x |
0.18x |
0.21x |
0.26x |
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Cash Flow Liquidity |
0.50x |
(0.11x) |
(0.09x) |
(0.05x) |
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Average Collection Period |
4 days |
9 days |
8days |
6 days |
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Days Inventory Held |
75 days |
106 days |
99days |
90 days |
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Days payable outstanding |
10 days |
11 days |
12 days |
8 days |
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Fixed Asset Turnover |
11.30x |
8.84x |
8.89x |
8.95x |
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Total Asset Turnover |
2.50x |
2.20x |
2.27x |
2.42x |
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Debt Ratio |
75.10% |
78.47% |
76.04% |
70.17% |
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Long Term Debt to Total Capitalization |
29.30% |
41.09% |
36.91% |
35.33% |
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Debt to Equity |
3.50x |
3.65x |
3.17x |
2.35x |
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Times Interest Earned |
2.40x |
1.72x |
2.00x |
2.23x |
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Fixed Charge Coverage |
1.50x |
1.59x |
1.77x |
1.85x |
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Gross Profit Margin |
23.10% |
21.21% |
22.39% |
23.52% |
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Operating Profit Margin |
2.00% |
3.05% |
2.86% |
2.52% |
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Net Profit Margin |
1.10% |
0.89% |
1.00% |
0.97% |
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Cash Flow Margin |
4.30% |
(5.31%) |
(5.15%) |
(4.48%) |
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Return on Investment |
2.75% |
1.97% |
2.28% |
2.35% |
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Return on Equity |
11.04% |
9.14% |
9.51% |
7.88% |
21. Below is a Statement of cash Flows for BK Enterprises. Using the information explain the company what is the company’s cash flow situation from 2010 through 2012, with specific reference to the three sections of the Cash Flow Statement (15 Points).
BK Enterprises
Statement of Cash Flows
For the Years Ended December 31, 2012, 2011, and 2010
2012 2011 2010
Net income $5,800 $3,300 $800
Adjustments to reconcile net income
to net cash provided by (used for)
operating activities:
Depreciation 1,200 520 380
Loss on sale of business assets 10 0 305
Changes in assets and liabilities:
Accounts receivable (490) (375) (135)
Inventory (6,900) (2,600) (1,700)
Other current assets 410 (495) (160)
Accounts payable and accrued exp. 1,300 570 1,100
Net cash provided by operating activities $1,330 $920 $590
Cash flows from investing activities:
Capital expenditures (740) (1,100) (550)
Proceeds from sales of equipment 0 10 2,020
Net cash used by investing activities ($740) ($1,090) $1,470
Cash flows from financing activities:
Exercise of stock options 2,000 380 0
Capital lease obligations 0 0 (250)
Payments on mortgage 0 0 (1,800)
Net cash (used) provided by financing
activities $2,000 $380 ($2,050)
Net increase (decrease) in cash $2,590 $210 $10
Cash at beginning of period 900 730 400
Cash at end of period $3,490 $940 $410
22. The following ratios have been calculated for Western Airlines. Analyze the capital structure, long-term solvency, and profitability of Western Airlines. Please use at least 8 ratios in total (10 points).
</P>
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<UNTBL><COLHD>Financial ratios |
2012 |
2011</COLHD> |
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<TB><BOLD>Leverage</BOLD> |
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Debt ratio (%) |
80.3 |
79.2 |
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Long-term debt to total capital (%) |
70.1 |
69.8 |
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Debt to equity (times) |
4.2 |
4.1 |
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Times interest earned (times) |
1.6 |
0.8 |
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Cash interest coverage (times) |
3.9 |
2.7 |
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Fixed charge coverage (times) |
1.0 |
0.7 |
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Cash flow adequacy (times) |
0.4 |
1.1 |
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Profitability |
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Gross profit margin (%) |
13.5 |
12.3 |
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Operating profit margin (%) |
1.4 |
0.9 |
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Net profit margin (%) |
(1.3) |
(2.8) |
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Cash flow margin (%) |
8.4 |
5.2 |
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Return on assets (%) |
(0.6) |
(1.9) |
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Return on equity (%) |
(4.1) |
(9.9) |
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Cash return on assets (%) |
9.8 |
7.6</TB></UNTBL></Q> |
