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Posted by: Homeworkhelp
Price Quoted by Student: $7
Posted On: 2012-04-09 12:12:47
 
Question

The Ferri Furniture Company, a manufacturer and wholesaler of high-quality home furnishings, has been experiencing low profitability in recent years. As a result, the board of directors has replaced the president of the firm with a new president, Helen Adams who has asked you to make an analysis of the firm's financial position using the extended Du Pont equation. In addition to the information given below, you have been informed by the new president that the firm has no lease payment but has a $2 million sinking fund payment on its debt. Ferri's Financial statements, are as follows: Ferri Furniture Company:

 

Balance Sheet as of December 31, 2002 (Millions of Dollars)

Cash $45 Account Payable $45 Marketable Securities 33 Notes Payable 45 Net receivables 66 Other current liabilities 21 Inventories 159 Total current liabilities $111 Total current Assets $303 Lon-term debt 24 Total liabilities $135 Gross fixed assets 225 Less depreciation 78 Common Stock $114 Net Fixed assets $147 Retained Earnings 201 Total Stockholder's equity $315 Total Assets $450 Total liabilities and equity $450 Ferri Furniture Company: Income Statement for Year Ended December 31, 2002 (Millions of Dollars) Net Sales $795.0 Cost of Goods sold 660.0 Gross Profit $135.0 Selling expenses 73.5 EBITDA $61.5 Depreciation expense 12.0 EBIT $49.5 Interest expense 4.5 Earnings Before Taxes $45.0 Taxes (40%) 18.0 Net Income $27.0

Calculate the following ratios:

1) Current ratio

2) Debt to asset

3) Times interest earned

4) EBITDA Coverage

5) Inventory Turnover

6) DSO (Days of sales outstanding)

7) Total Asset Turnover

8) ROE

9) ROA

10) Profit margin 


Solutions
Calculate the following ratios: 1) Current ratio
Price $7
Attachment 1: Fin 317 The Ferri Furniture Company.doc
Solution Posted By: Homeworkhelp    Posted on: 09-04-2012