{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

SEATWORK1 3-6A - SEATWORK 1 3-6A a RATIO Liquidity Current...

Info icon This preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
SEATWORK # 1 3-6A. a. Industry RATIO 2002 2003 Norm Liquidity: Current Ratio 6.0x 4.0x 5.0x Acid-test (Quick) Ratio 3.25x 1.92x 3.0x Average Collection Period 137 days 107 days 90 days Inventory Turnover 1.27x 1.36x 2.2x Operating profitability: Operating Profit Margin 20.8% 24.8% 20.0% Total Asset Turnover .5x .56x .75x Average Collection Period 137 days 107 days 90 days Inventory Turnover 1.27x 1.36x 2.2x Fixed Asset Turnover 1.00x 1.04x 1.00x Financing : Debt Ratio 0.33 0.35 0.33 Times Interest Earned 5.0x 5.63x 7.0x Return on common stockholders’ investment: Return on Common Equity 7.5% 10.5% 9.0% b. Regarding the firm’s liquidity in 2003, the current and acid-test (quick) ratios are both well below the industry averages and have decreased considerably from the prior year. Also, the average collection period and inventory turnover do not compare favorably against the industry averages, which suggests that accounts receivable and inventories are not of equal quality of these assets in other firms in the industry. So, we may reasonably conclude that Pamplin is less liquid than the average company in its industry.
Image of page 1

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern