Comprehensive Ratio Analysis

P3. Tuxedo Corporation’s condensed comparative income statements and balance sheets follow. All figures are given in thousands of dollars, except earnings per share.

 

 

✔ 1a: 2014 Current ratio: 1.5  times

✔ 1e: 2014 Inventory turnover: 3.9 times

✔ 2c: 2014 Return on assets: 5.0%

 

 

tuxedo Corporation Comparative Income Statements

For the years ended December 31, 2014 and 2013

 

✔ 3b: 2014 Return on equity: 8.2%                                                                                                                                                                                                                                                          

 

✔ 4a: 2014 Cash flow yield: 1.7 times

✔ 5b: 2014 Dividend yield: 1.3%

 

2014                             2013

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales $800,400   $742,600 Cost of goods sold 454,100   396,200 Gross margin $346,300   $346,400 Operating expenses:       Selling expenses $130,100   $104,600 Administrative expenses 140,300   115,500 Total operating expenses $270,400   $220,100 Income from operations $  75,900   $126,300 Interest expense 25,000   20,000 Income before income taxes $  50,900   $106,300 Income taxes expense 14,000   35,000 Net income $  36,900   $  71,300 Earnings per share $      2.46   $      4.76   Â

tuxedo Corporation Comparative Balance Sheets December 31, 2014 and 2013

 

    Cash	  Assets	2014   $  31,100	Â	2013   $  27,200
Accounts receivable (net)	Â	72,500	Â	42,700
Inventory	Â	122,600	Â	107,800
Property, plant, and equipment (net)	Â	577,700	Â	507,500
Total assets	Â	$803,900	Â	$685,200
Liabilities and Stockholders’ equity
Accounts payable		$104,700	Â	$  72,300
Notes payable (short-term)		50,000	Â	50,000
Bonds payable		200,000	Â	110,000
Common stock, $10 par value		300,000	Â	300,000
Retained earnings		149,200	Â	152,900
Total liabilities and stockholders’ equity		$803,900	Â	$685,200

 

Additional data for Tuxedo in 2014 and 2013 follow.

 

Â	2014	2013
Net cash flows from operating activities	$64,000	$99,000
Net capital expenditures	$119,000	$38,000
Dividends paid	$31,400	$35,000
Number of common shares	30,000	30,000
Market price per share	$80	$120

Balances of selected accounts at the end of 2012 were accounts receivable (net), $52,700; inventory, $99,400; accounts payable, $64,800; total assets, $647,800; and stockhold- ers’ equity, $376,600. All of the bonds payable were long-term liabilities.

(Continued)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ReQUIReD

Perform the following analyses. (Round to one decimal place.)

1.    Prepare an operating asset management analysis by calculating for each year the

(a)    current ratio, (b) quick ratio, (c) receivables turnover, (d) days’ sales uncol- lected, (e) inventory turnover, (f) days’ inventory on hand, (g) payables turnover,

(h) days’ payable, and (i) financing period.

2.    Prepare a profitability and total asset management analysis by calculating for each year the (a) profit margin, (b) asset turnover, and (c) return on assets.

3.    Prepare a financial risk analysis by calculating for each year the (a) debt to equity ratio, (b) return on equity, and (c) interest coverage ratio.

4.    Prepare a liquidity analysis by calculating for each year the (a) cash flow yield, (b) cash flows to sales, (c) cash flows to assets, and (d) free cash flow.

5.    Prepare an analysis of market strength by calculating for each year the (a) price/ earnings (P/E) ratio and (b) dividend yield.

6.    aCCounting ConneCtion ▶ After making the calculations, indicate whether each ratio improved or deteriorated from 2013 to 2014 (use F for favorable and U for unfavorable and consider changes of 0.1 or less to be neutral).