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Unformatted text preview: 20x0 20x1 ROA 10% 8% ROE 17% 14% Gross Margin Percentage 25% 25% Return on Sales 6% 4% Asset Turnover 1.48 X 1.58 X Days' Cash 1.43 Days 1.47 Days Days' Receivables 38.1 Days 36.2 Days Days' Inventories 173.8 Days 162.1 Days Inventory Turnover 2.10 X 2.25 X Current Ratio 1.53 1.3 Acid-Test Ratio 0.54 0.48 Debt/Capitalization Ratio 30% 28% Times Interest Earned 7.32 X 6.87 X 1In 20x0 sales look larger because the taxes are treated as a product cost instead of a period cost. Thus, sales look significantly greater as opposed to in 20x1. Likewise, if the taxes were treated as a product cost, it reduces the gross margin percentage. 2Why is net income down in 20x0 while revenues were up? What was wrong with Mr Wal ingford's original AR-42 proposal? Ian Wal ingford wanted to bor ow money for the investment, thus they must analyze the ef ect of the debt service payment on the net present value. The expect return should be hihger, but this al may decrease the profitability. The estimated end-of-life value of UK assets- the salvage value of plant is 1,400,000 (same as initial investment). The estimated end-of-life value of UK assets- the salvage value of plant is 1,400,000 (same as initial investment)....
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