Question

Name:								($ in millions)
Assets								December 31, 2016		December 31, 2017			Dollar Change				Source or Use Increase/Decrease
Current Assets
Cash								$           400		$           500
Accounts receivable								1,510		1,750
Inventory								1,179		1,440
Total Current Assets								$       3,089		$        3,690
Fixed assets
Net plant and equipment								$       5,666		$        6,090
Total Assets								$       8,755		$        9,780
Liabilities and Owners' Equity
Current liabilities
Accounts payable								$           880		$           900
Notes payable								-		-
Total Current Liabilities								$           880		$           900
Long-term debt								1,500		1,700
Total Liabilities								$       2,380		$        2,600
Stockholder's equity
Common stock and paid-in surplus								$       1,000		$        1,000
Retained earnings								5,375		6,180
Total Stockholder's equity								$       6,375		$        7,180
Total liabilities and stockholders' equity								$       8,755		$        9,780
Increase in Cash
Common-size Income Statement								FYE 12/31/2017
Sales								$10,000		100%
Cost of Goods Sold								5,350		53.5%
Operating Expenses								2,250		22.5%
Depreciation								1,100		11.0%
Earnings Before Interest & Taxes								$1,300		13.0%
Interest Expense								170		1.7%
Taxable Income								$1,130		11.3%
Taxes								230		2.3%
Net Income								$900		9.0%
Dividends								$95		1.0%
Addition To Retained Earning								$           805		8.1%
Major Source
Major Use
There are 5 Majors		Cash Flow Activity			Compute ratios to 2 decimals except for Working Capital							December 31, 2016				December 31, 2017
					Short-term Solvency/Liquidity
					Working Capital
					Current Ratio
					Quick Ratio
					Cash Ratio
					Long-term Solvency/Leverage
					Total Debt Ratio%
					Equity multiplier
					Times Interest Earned Ratio
					Cash Coverage Ratio
					Asset Utilization/Turnover
					Inventory Turnover
					Day's Sales In Inventory
					Receivable Turnover
					Day's Sales in Receivables
					Operating Cycle in days
					Total Asset Turnover
					Profitability
					Profit Margin%
					Return on Assets (ROA)%
					Return on Equity (ROE)%
					ROE - Using Du Point Identity%
					Borrowing Rate
					According to the Short-Term Solvency ratios, has Corbett Corporation's liquidity improved or declined?
					Answer:

Balance Sheets of December 31, 2016 and 2017 and Income Statement for the Year Ended December 31, 2017 are given below. Please complete columns Dollar Change, Source or Use Increase/Decrease, Major Source/Major Use, and Cash Flow Activity to prove Increase or decrease in Cash. Compute Short-term Solvency/Liquidity for both years to answer whether Corbett Enterprises’ liquidity has improved or declined. Also, compute Long-term Solvency, Asset Utilization, and Profitability ratios for 2017 since only the 2017 income Statement is given.

Answer 1

	$ in mln
Particulars	2016	2017	Dollar change	Source or use inc/dec
cash	400	500
accounts recievable	1510	1750	-240	Use increase
inventory	1179	1440	-261	Use increase
current assets	3089	3690
Net Plant Equipment	5666	6090	-424	Use increase
Total Assets	8755	9780
Accounts payable	880	900	20	Source increase
Long term debt	1500	1700	200	Source increase
Total liabilities	2380	2600
Common stock and paid in surplus	1000	1000	0	No change
Retained earnings	5375	6180	805	Source increase
total shareholders equity	6375	7180
Total liabilities and stockholders' equity	8755	9780
Increase in Cash			100
Major source			Retained earnings
Major Use			Plant and Equipment	2016 2017 Short term solvency/ Liquidity Working capital $ 709.00 $ 1,090.00 current ratio 3.51 4.10 quick ratio 2.17 2.50 cash ratio 0.45 0.56 Long term solvency total debt ratio % 0.27 0.27 equity multiplier 1.37 1.36 times interest earned ratio 7.65 cash coverage ratio 14.12 Asset Utilisation/Turnover inventory turnover 8.48 day's sales in inventory 43.03 recievable turnover 6.62 day's sales in recievables 55.12 operating cycle in days 66.03 total asset turnover 1.14 Profitability Profit Margin (assuming Net profit) 9.00% return on assets 12.22% return on equity 12.63% ROE - Using Du Point Identity% 14%