6-2-Assigment 1-Feb 10, 2019.docx - Unit 2 Assignment 1 1 The Budda-Bing Manufacturing Company Current Financial Position Analysis Part A-a Historical

6-2-Assigment 1-Feb 10, 2019.docx - Unit 2 Assignment 1 1...

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- Unit 2- Assignment 1- Feb 10, 2019 The Budda-Bing Manufacturing Company Current Financial Position Analysis Part A-a Historical and Industrial Average Ratios 2016 2017 2018 Indus y: 20 Liquidity Current Ratio (Current Asset/Current Liabilities) 1.7 1.8 2.5 Quick Ratio (Total current assets – Inventory – prepaid expenses/current liabilities) 1 0.9 1.4 Activity Average Collection Period (365/Accounts receivable turnover ratio) 50 days 55 days 56 days 46 d Total Asset Turnover (Times) (Sales/Average total assets) 1.5 1.5 1.7 Debt Debt Ratio (Total liabilities/Total assets * 100) 45.80 % 54.30% 57% 24.5 Times Interest Earned Ratio (Income before Interest and Taxes/Interest expense) 2.2 1.9 1.6 Profitability Gross Profit Margin (Gross profit/Net sales * 100) 27.50 % 28% 27% 2 Net Profit Margin (Net profit after interest and taxes/Net sales * 100) 1.10% 1.00% 0.70 % 1.2 ROA (Net profit after interest and taxes/Average total assets * 100) 1.70% 1.50% 1.20 % 2.4 ROE (Net profit after interest and taxes/Shareholders’ equity * 100) 3.10% 3.30% 2.60 % 3.2 Calculations: Current Ratio Current Assets Current Liabilities 2.5 1,531,181 616,000 Quick Ratio Current Assets Inventory Prepaid Expenses Current Liabilities 1.35 1,531,181 700,625 616,000 Average collection period Accounts receivable 2017 $763,900 Accounts receivable 2018 $805,556 Accounts Account receivable (AR 2017+A.R 2018)/2 784728 1
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- Unit 2- Assignment 1- Feb 10, 2019 Accounts receivable turnover (Sales/Average A.R) $6 Average Collection Period (365/Account Receivable Turnover) 56.44 Assuming Sales are on credit $5,075,000 Total Asset for 2017 $2,895,152 Total Asset for 2018 $3,125,000 Average total assets (T.A 2017+T.A 2018)/2 $3,010,076 Total Asset Turnover (Times) (Sales/Average total assets) 1.7 Debt Ratio (Total liabilities/Total assets * 100) Total liabilities $1,781,250 Total assets $3,125,000 Debt ratio is 1,781,250/3,125,000 57% Times Interest Earned Ratio (Income before Interest and Taxes/Interest expense)
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