In: Finance
Comprehensive Ratio Analysis The Jimenez Corporation's forecasted 2020 financial statements follow, along with some industry average ratios. Jimenez Corporation: Forecasted Balance Sheet as of December 31, 2020
Calculate Jimenez's 2020 forecasted ratios, compare them with the industry average data, and comment briefly on Jimenez's projected strengths and weaknesses. Assume that there are no changes from the prior period to any of the operating balance sheet accounts. Do not round intermediate calculation. Round your answers to two decimal places.
So, the firm appears to be -Select-badlywellItem 27 managed. |
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Quick Ratio = (Cash+ Cash Equivalents+ Short term Investments+ Current Receivables)/Current Liabilities
= (68000+0+0+439000)/602000
= 0.842192691
= 0.84 Times
Current Ratio = Current Assets / Current Liabilities
= 1405000/602000
= 2.333887043
= 2.33 Times
Inventory Turnover Ratio = Cost of Goods Sold/ Average Inventory
= 3692000/898000
= 4.111358575
= 4.11 Times
Days Sales Outstanding = (Accounts Receivable/ Total Credit Sales in Accounting Period)*Days in Accounting Period
= (439000/4290000)*365
= 37.35081585
= 37.35 Days
= 38 Days (as Days are always rounded off to next one)
Fixed Asset Turnover Ratio = Net Sales/ Average Fixed Assets
= 4290000/431000
= 9.953596288
= 9.95 Times
Total Asset Turnover Ratio = Net Sales/ Average Total Assets
= 4290000/1836000
= 2.336601307
= 2.34 Times
Return on Asset Ratio (%) = (Net Income /Average Total Asset)*100
(ROA) = (113658/1836000)*100
= 6.190522876
= 6.19 %
Return on Equity Ratio (%) = (Net Income/ Shareholder’s Equity)*100
(ROE) = (113658/(575030+254710))*100
= 13.69802589 %
= 13.70%
Profit Margin Ratio (%) = (Net Profit/ Sales)*100
= (113658/4290000)*100
= 2.649370629 %
= 2.65%
Debt to Asset Ratio (%) = (Short term Debt + Long Term Debt)/ Total Asset*100
= (332000+114000+404260)/1836000*100
= 0.463104575*100
= 46.31%
Liabilities to Asset Ratio = = (Short term Liabilities + Long Term Liabilities)/ Total Asset*100
= (332000+114000+404260)/1836000*100
= 0.463104575*100
= 46.31%
Market to Book Ratio (M/B Ratio) = Market Capitalisation/ Total Book Value
= (19.77*23000)/(575030+254710)
= 0.548015041
= 0.55
Ratios |
Firm |
Industry |
Comment |
Quick ratio |
0.84 |
1.0 |
Weak |
Current ratio |
2.33 |
2.7 |
Weak |
Inventory turnover |
4.11 |
7.0 |
Poor |
Days sales outstanding |
38 days |
32 days |
Poor |
Fixed assets turnover |
9.95 |
13.0 |
Poor |
Total assets turnover |
2.34 |
2.6 |
Poor |
Return on assets |
6.19% |
9.1% |
Bad |
Return on equity |
13.70% |
18.2% |
Bad |
Profit margin on sales |
2.65% |
3.5% |
Bad |
Debt-to-assets ratio |
46.31% |
21.0% |
Low |
Liabilities-to-assets ratio |
46.31% |
50.0% |
High |
P/E ratio |
4.0 |
5.0 |
Poor |
Market/Book ratio |
0.55 |
3.5 |
Poor |