Cross-sectional ratio analysis:Use the following financial statements for Fox Manufacturing Company for the year ended December 31, 2003, along with the industry average ratios also given in what follows, to:A. Prepare and interpret a complete ratio analysis of the firm’s 2003 operations.B. Summarize your findings and make recommendations Hi. You may use excel if you want. Thank you! :) Fox Manufacturing CompanyIncome Statementfor the Year Ended December 31, 2003Sales revenue$600,000Less: Cost of goods soldGross profitsLess: Operating expenses460,000$140,000General and administrative expenses$30,000Depreciation expenseTotal operating expense30,00060,000Operating profitsS 80,000Less: Interest expense10,000S 70,000Net profits before taxesLess: Taxes27,100Net profits after taxes (earnings availablefor common stockholders)$ 42,900Eamings per share (EPS)$2.15Fox Manufacturing CompanyBalance SheetDecember 31, 2003Assets$ 15,0007,200CashMarketable securitiesAccounts receivable34,10082,000$138,300InventoriesTotal current assetsNet fixed assets$270,000S408,300Total assetsLiabilities and Stockholders' EquityAccounts payable$ 57,000Notes payable13,000Ассruals5,000$ 75,000Total current liabilitiesLong-term debtStockholders' equity$150,000Common stock equity (20,000 shares outstanding)Retained earnings$110,20073,100$183,300Total stockholders' equityTotal liabilities and stockholders' equityS408,300 RatioIndustry average, 2003Current ratio2.35Quick ratioInventory turnover“Average collection periodª0.874.5535.3 daysTotal asset turnover1.09Debt ratio0.300Times interest earned ratio12.3Gross profit marginOperating profit marginNet profit marginReturn on total assets (ROA)0.2020.1350.0910.099Return on common equity (ROE)0.167Earnings per share (EPS)$3.10"Based on a 360-day year and on end-of-year figures.

Solution:- A) Calculation of ratios as follows under:- Current Ratio = Current Assets/Current…

Cross-sectional ratio analysis: Use the following financial statements for Fox Manufacturing Company for the year ended December 31, 2003, along with the industry average ratios also given in what follows, to: A. Prepare and interpret a complete ratio analysis of the firm’s 2003 operations. B. Summarize your findings and make recommendations

Cross-sectional ratio analysis: Use the following financial statements for Fox Manufacturing Company for the year ended December 31, 2003, along with the industry average ratios also given in what follows, to: A. Prepare and interpret a complete ratio analysis of the firm’s 2003 operations. B. Summarize your findings and make recommendations

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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