You obtained the following ratios for ABC Co for 2013:
Days Sales Outstanding
Fixed Assets Turnover
Total Asset Turnover
Time interest earned
Anwer questions (a) to (e)
a)You also understand that ABC Co cost of goods sold is 92% of sales and that it paid a total of $148 (thousand) in interest. The tax rate is 40%. Provide ABC Co income statement for 2013.
b)Complete the Balance Sheet for ABC Co as of December 31, 2013 (in thousands)
Cash and Equivalents
Total Current Assets
Net plant and equipment
Liabilities and Equity
Long term bonds
Total Liabilities and Equity
c)Compute ABC Co RoA and RoE. Compare to Industry RoA 11%, RoE 25%
d)Provide the DuPont Analysis with comments. Note that the industry Debt to Asset ratio is 50%. Show your calculations.
e)Finally using c) d) and the table above, comment on the companyÂ’s:
i. Liquidity (define)
ii.Adequacy of its credit policy
iii.Efficiency of asset usage (should the company increase inventories, fixed assets)
iv.Adequacy of leverage level.