Pinnacle Instructions-Chap 8 (4) - Pinnacle Project...

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Unformatted text preview: Pinnacle Project Instructions – Chapter 8 Read the introductory information on pages 245-247. 1. Calculate the following ratios for years 2009, 2010, & 2011 based on the total income statements & balance sheets for the entire Pinnacle Manufacturing Company that are available in Excel files in Blackboard under the “Assignments” feature. Ratio formulas can be found on pages 232-233 in the textbook or in any accounting textbook. a) Current ratio b) Debt to equity c) Net Income before Tax as a % of Net Sales d) Gross Profit % e) Inventory turnover f) Days to sell inventory g) A/R turnover h) Days to collect receivables i) Allowance for doubtful accounts as a % of gross A/R j) Bad Debt expense as a % of gross A/R 2. Evaluate the results of the ratio calculations and assess the likelihood (high, medium, or low) that Pinnacle as a whole, and any one division, is likely to fail financially in the next 12 months. Support your assessment with comments on specific results, e.g. “because the current ratio has improved, your assessment with comments on specific results, e....
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