Question

The balance sheet and income statement shown below are for Pettijohn Inc. Note that the firm has no amortization charges, it does not lease any assets, none of its debt must be retired during the next 5 years, and the notes payable will be rolled over.

Balance Sheet (Millions of $)
Assets	2012
Cash and securities	$  1,554.0
Accounts receivable	9,660.0
Inventories	13,440.0
Total current assets	$24,654.0
Net plant and equipment	17,346.0
Total assets	$42,000.0
Liabilities and Equity
Accounts payable	$  7,980.0
Notes payable	5,880.0
Accruals	4,620.0
Total current liabilities	$18,480.0
Long-term bonds	10,920.0
Total debt	$29,400.0
Common stock	3,360.0
Retained earnings	9,240.0
Total common equity	$12,600.0
Total liabilities and equity	$42,000.0
Income Statement (Millions of $)	2012
Net sales	$58,800.0
Operating costs except depr'n	$54,978.0
Depreciation	$  1,029.0
Earnings bef int and taxes (EBIT)	$  2,793.0
Less interest	1,050.0
Earnings before taxes (EBT)	$  1,743.0
Taxes	$     610.1
Net income	$  1,133.0
Other data:
Shares outstanding (millions)	175.00
Common dividends	$   509.83
Int rate on notes payable & L-T bonds	6.25%
Federal plus state income tax rate	35%
Year-end stock price	$77.69

        

           Required:

1. What is the firm's current ratio?
2. What is the firm's quick ratio?
3. What are the firm’s days sales outstanding? Assume a 360-day year for this calculation.
4. What is the firm's total assets turnover?
5. What is the firm's inventory turnover ratio?
6. What is the firm's ROA?
7. What is the firm's ROE?
8. What is the firm's net profit margin?
1. Analyze the company performance (min 250 words).

Please note for each answer formula and calculations should be included.

Answer 1

a.Current Ratio=(Current assets)/(Current Liabilities)=24654/18480=   1.33

CURRENT RATIO

1.33

.b.Quick ratio=(Quick Assets)/(Current Liabilities)

Quick assets=Cash& Marketable securities+ Accounts receivable=(1554+9660)=$11,214

Quick Ratio=11214/18480= 0.61

QUICK RATIO

0.61

.c. Number of days sales Outstanding

Accounts Receivable Turnover=( sales)/(Accounts receivable)=58800/9660=6.086957

Number of days sales Outstanding =360/Accounts Receivable turnover=360/6.086957=59.14 days

Number of days sales outstanding

59.14

Days

.d. Asset turnover=Sales/total assets=58800/42000=1.40

Asset Turnover

1.40

e. Inventory Turnover Ratio=Cost of goods sold/ Inventory

Inventory Turnover Ratio=54978/13440=4.09

Inventory Turnover Ratio

4.09

.f. Return on Asset(ROA)= Net income/Total assets=1133/42000=0.0270=2.70%

Return on Assets(ROA)

0.0270

2.7%

g. Return on Equity(ROE)=Net Income/Stockholders equity=1133/12600=0.09=9%

Return on Equity (ROE)

0.090

9%

h. Net Profit Margin=Net Income/Sales=1133/58800=0.0193=1.93%

Net Profit Margin

0.0193

1.93%