View the step-by-step solution to:

Jimenez Corporation: Forecasted Balance Sheet as of December 31, 2011 Assets Cash $72,000 Accounts receivable 439,000 Inventories 894,000 Total...

The Jimenez Corporation's forecasted 2011financial statements follow, along with some industry avarage ratios.

a) Calculate Jimenez's 2011 forecasted ratios, compare them with the industry average data, and comment briefly on Jimenez's projected strengths and weaknesses.
b) what do you think would happen to Jimenez's ratios if the company initiated cost-cutting measures that allowed it to hold lower levels of inventory and substantially decreased the cost of goods sold? Think about about which ratios would be affected by changes in these two accounts.
Jimenez Corporation: Forecasted Balance Sheet as of December 31, 2011 Assets Cash $72,000 Accounts receivable 439,000 Inventories 894,000 Total current assets $1,405,000 Fixed assets 431,000 Total assets $1,836,000 Liabilities and Equity Accounts and notes payable $432,000 Accruals 170,000 Total current liabilities $602,000 Long-term debt 404,290 Common stock 575,000 Retained earnings 254,710 Total liabilities and equity $1,836,000 Jimenez Corporation: Forecasted Income Statement for 2011 Sales $4,290,000 Cost of goods sold 3,580,000 Selling, general, and administrative expenses 370,320 Depreciation 159,000 Earnings before taxes (EBT) $180,680 Taxes (40%) 72,272 Net income $108,408 Per-Share Data EPS $4.71 Cash dividends per share $0.95 P/E ratio 5 Market price (average) $23.57 Number of shares outstanding 23,000 Industry Financial Ratio (2010)* Quick ratio 1.0 Current ratio 2.7 Inventory turnover** 7.0 Days sales outstanding*** 32 days Fixed assets turn over** 13.0 Total assets turnover** 2.6 Return on assets 9.1% Return on equity 18.2% Debt ratio 50.0% Profit margin on sales 3.5% P/E ratio 6.0 P/cash flow ratio 3.5 *Industry average ratios have been constant for the past 4 years. **Based on year-end balance sheet figures. ***Calculation is based on a 365-day year. Calculate Jimenez's 2011 forecasted ratios, compare them with the industry average data, and comment briefly on Jimenez's projected strengths and weaknesses. Round DSO to the nearest whole. Round the other ratios to one decimal place.
Background image of page 1
Ratios Firm Industry Comment Quick ratio ________ 1.0 _________________ Current ratio ________ 2.7 _________________ Inventory turnover ________ 7.0 _________________ Days sales outstanding ________ days 32 days _________________ Fixed assets turnover ________ 13.0 _________________ Total assets turnover ________ 2.6 _________________ Return on assets ________ % 9.1% _________________ Return on equity ________ % 18.2% _________________ Debt ratio ________ % 50.0% _________________ Profit margin on sales ________ % 3.5% _________________ EPS $4.71 n.a. -- Stock Price $23.57 n.a. -- P/E ratio ________ 6.0 _________________ P/CF ratio ________ 3.5 _________________ M/B ratio 0.65 n.a. -- So, the firm appears to be_________________ managed.
Background image of page 2
Sign up to view the entire interaction

Top Answer

Hi Student, please find... View the full answer

8418908.docx

Calculate Jimenez's 2011 forecasted ratios, compare them with the industry average data, and comment
briefly on Jimenez's projected strengths and weaknesses. Round DSO to the nearest whole. Round...

Sign up to view the full answer

Why Join Course Hero?

Course Hero has all the homework and study help you need to succeed! We’ve got course-specific notes, study guides, and practice tests along with expert tutors.

-

Educational Resources
  • -

    Study Documents

    Find the best study resources around, tagged to your specific courses. Share your own to gain free Course Hero access.

    Browse Documents
  • -

    Question & Answers

    Get one-on-one homework help from our expert tutors—available online 24/7. Ask your own questions or browse existing Q&A threads. Satisfaction guaranteed!

    Ask a Question
Ask a homework question - tutors are online