Make Analysis into an evaluation of the firm’s liquidity, activity, debt, profitability and market ratios.Historical and Industry Average RatiosHTS Software , Inc. IndustryRatio201020112011Liquidity Ratios Current Ratio2.62.082.7Quick Ratio1.81.321.75Activity Ratios Inventory Turnover4.53.004.7Average Collection Period40days53days42 daysTotal Asset Turnover1.20.801Debt Ratios Debt Ratio20%28%21%Times Interest Earned968.9Profitability Ratios Gross Profit Margin43%43%44%Operating Profit Margin30%26%32%Net Profit Margin20%17%21%Return on total assets12%14%13%Return on Equity15%19%16%Market Ratios Price/Earnings Ratio7.34.48

Ratio analysis: Ratio analysis can be defined as the qualitative method used for the purpose of…

Answered: Make Analysis into an evaluation of the…

Make Analysis into an evaluation of the firm’s liquidity, activity, debt, profitability and market ratios. Historical and Industry Average Ratios

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter7: Analysis Of Financial Statements

Section: Chapter Questions

Problem 1Q: Define each of the following terms: Liquidity ratios: current ratio; quick, or acid test,...

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performance of National Company. Comment on overall financial position and financial health of the business. Identify problems and recommend possible solutions, if historical ratios of company are: Ratios201720182019 Current Ratio1.41.51.6 Acid Test Ratio0.850.740.63 Asset Turnover Ratio4 times3.22.5 Inventory Turnover Ratio6 times5.55 Collection Period6 times5.55 Account payable turnover8 times10 times12 times Total Debt to equity Ratio1.381.611.91 Interest cover543.5 Gross Profit Ratio20%22%23% Net Profit Margin8.5%6.7%3.8% Return on Equity20%21%24% Sales Growth Rate8%5%2% P/E Ratio1098 Fixed Asset Utilization Ratio21.71.4
Hello! look at the attached images and answer: (a) Calculate ratios for the year ended 31 December 2021 (showing your workings) for Primrose Plc, equivalent to those provided above. i. Return on year-end capital employed ii. Net asset turnover iii. Gross profit margin iv. Net profit margin v. Current ratio vi. Closing inventory holding period vii. Trade receivables’ collection period viii. Trade payables’ payment period ix. Dividend yield x. Dividend cover (b) Analyse the financial performance and position of Primrose Plc for the year ended 31 December 2021 compared to 31 December 2020. (c) Explain the uses and the general limitations of ratio analysis. Thanks a lot!
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Methodology:• Based on the above information the consulting group will conduct ratio analysis for the following ratios:o Current ratio o Receivable’s turnover o Times’s interest earned o Profit margin o Days in inventory o Return on assets o Cash current debt coverage ratio • As a next step the group will compare the ratios calculated above with industry benchmarks. The benchmarks are indicated within brackets besides each ratio.o Current ratio (3 to 1) o Receivable’s turnover (13 times) o Times’s interest earned (9 times) o Profit margin (12%) o Days in inventory (50 days) o Return on assets (12%) o Cash current debt coverage ratio (2 times
Define each of the following terms:a. Liquid assetb. Liquidity ratios: current ratio; quick (acid test) ratioc. Asset management ratios: inventory turnover ratio; days sales outstanding (DSO);fixed assets turnover ratio; total assets turnover ratiod. Debt management ratios: total debt to total capital; times-interest-earned (TIE) ratioe. Profitability ratios: operating margin; profit margin; return on total assets (ROA);return on common equity (ROE); return on invested capital (ROIC); basic earning power (BEP) ratiof. Market value ratios: price/earnings (P/E) ratio; market/book (M/B) ratio; enterprise value/EBITDA ratio g. DuPont equation; benchmarking; trend analysish. “Window dressing” techniques
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2. Calculate the projected inventory turnover, days sales outstanding (DSO), fixed assets turnover, and total assets turnover. How does Abiproffy's utilization of assets stack up against other firms in its industry? Calculate the projected current and quick ratios based on the projected balance sheet and income statement data. What can you say about the company's liquidity position and its trend? Calculate the projected debt ratio, the debt-to-equity ratio, liabilities-to-assets ratio, earnings multiplier, times-interest-earned, and EBITDA coverage ratios. How does Abiproffy compare with the industry with respect to financial leverage? What can you conclude from these ratios? Calculate the projected price/earnings ratio and market/book ratio. Do these ratios indicate that investors are expected to have a high or low opinion of the company? It is commonly recommended that the managers of a firm compare the performance of their firm to that of its peers. Increasingly, this is becoming a…
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Historical and Industry Average Ratios
HTS Software , Inc.
			Industry
Ratio	2010	2011	2011
Liquidity Ratios
Current Ratio	2.6	2.08	2.7
Quick Ratio	1.8	1.32	1.75
Activity Ratios
Inventory Turnover	4.5	3.00	4.7
Average Collection Period	40days	53days	42 days
Total Asset Turnover	1.2	0.80	1
Debt Ratios
Debt Ratio	20%	28%	21%
Times Interest Earned	9	6	8.9
Profitability Ratios
Gross Profit Margin	43%	43%	44%
Operating Profit Margin	30%	26%	32%
Net Profit Margin	20%	17%	21%
Return on total assets	12%	14%	13%
Return on Equity	15%	19%	16%
Market Ratios
Price/Earnings Ratio	7.3	4.4	8