Question

In: Finance

Analyze its overall financial situation from both a cross-sectional and a time-series viewpoint. Break your analysis...

Analyze its overall financial situation from both a cross-sectional and a time-series viewpoint. Break your analysis into evaluations of the firm’s liquidity, activity, debt, profitability, and market.

Ratio

Actual 2017

Actual 2018

Industry average, 2019

Current ratio

  1.40  

  1.55  

  1.85  

Quick ratio

  1.00  

  0.92  

  1.05  

Inventory turnover

  9.52  

  9.21  

  8.60  

Average collection period

45.6 days

36.9 days

35.5 days

Average payment period

59.3 days

61.6 days

46.4 days

Total asset turnover

  0.74  

  0.80  

  0.74  

Debt ratio

  0.20  

  0.20  

  0.30  

Times interest earned ratio

  8.2    

  7.3    

  8.0    

Fixed-payment coverage ratio

  4.5    

  4.2    

  4.2    

Gross profit margin

  0.30  

  0.27  

  0.25  

Operating profit margin

  0.12  

  0.12  

  0.10  

Net profit margin

  0.062

  0.062

  0.053

Return on total assets (ROA)

  0.045

  0.050

  0.040

Return on common equity (ROE)

  0.061

  0.067

  0.066

Earnings per share (EPS)

$1.75  

$2.20  

$1.50  

Price/earnings (P/E) ratio

12.0    

10.5    

11.2    

Market/book (M/B) ratio

  1.20  

  1.05  

  1.10  

Historical and Industry Average Ratios for Sterling Company

Solutions

Expert Solution

jeff jeffy answered 1 year ago
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