Comprehensive Ratio Analysis The Jimenez Corporation's forecasted 2020 financial statements follow, along with some industry average ratios. Jimenez...

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Finance

Comprehensive Ratio Analysis
The Jimenez Corporation's forecasted 2020 financial statementsfollow, along with some industry average ratios.
Jimenez Corporation: Forecasted Balance Sheet as ofDecember 31, 2020
Assets
Cash $    71,000
Accounts receivable 439,000
Inventories 895,000
  Total current assets $1,405,000
Fixed assets 431,000
Total assets $1,836,000
Liabilities and Equity
Accounts payable $   332,000
Notes payable    110,000
Accruals 160,000
  Total current liabilities $   602,000
Long-term debt 403,490
Common stock 575,800
Retained earnings 254,710
Total liabilities and equity $1,836,000
Jimenez Corporation: Forecasted IncomeStatement for 2020
Sales $4,290,000
Cost of goods sold 3,713,000
Selling, general, and administrative expenses 411,456
  Earnings before interest and taxes (EBIT) $   165,544
Interest expense 30,000
  Earnings before taxes (EBT) $   135,544
Taxes (25%) 33,886
Net income $   101,658
Jimenez Corporation: Per Share Data for2020
EPS $  4.42
Cash dividends per share $  0.95
P/E ratio 5.0
Market price (average) $22.10
Number of shares outstanding 23,000

Industry Ratios^a
Quick ratio 1.0
Current ratio 2.7
Inventory turnover^b 7.0
Days sales outstanding^c 32.0 days
Fixed assets turnover^b 13.0
Total assets turnover^b 2.6
Return on assets 9.1 %
Return on equity 18.2 %
Profit margin on sales 3.5 %
Debt-to-assets ratio 21.0 %
Liabilities-to-assets ratio 50.0 %
P/E ratio 6.0
Market/Book ratio 3.5
Notes:
^aIndustry average ratios have beenstable for the past 4 years.
^bBased on year-end balance sheetfigures.
^cCalculation is based on a 365-dayyear.
Calculate Jimenez's 2020 forecasted ratios, compare them withthe industry average data, and comment briefly on Jimenez'sprojected strengths and weaknesses. Assume that there are nochanges from the prior period to any of the operating balance sheetaccounts. Do not round intermediate calculation. Round your answersto two decimal places.
Ratios Firm Industry Comment
Quick ratio 1.0 -Select-StrongWeakItem 2
Current ratio 2.7 -Select-StrongWeakItem 4
Inventory turnover 7.0 -Select-PoorHighItem 6
Days sales outstanding days 32 days   -Select-PoorHighItem 8
Fixed assets turnover 13.0   -Select-PoorHighItem 10
Total assets turnover 2.6 -Select-PoorHighItem 12
Return on assets %    9.1% -Select-BadGoodItem 14
Return on equity % 18.2% -Select-BadGoodItem 16
Profit margin on sales %   3.5% -Select-BadGoodItem 18
Debt-to-assets ratio % 21.0% -Select-LowHighItem 20
Liabilities-to-assets ratio % 50.0% -Select-LowHighItem 22
P/E ratio 6.0 -Select-PoorHighItem 24
Market/Book ratio 3.5 -Select-PoorHighItem 26
So, the firm appears to be -Select-badlywellItem 27 managed.

Answer & Explanation Solved by verified expert

4.4 Ratings (697 Votes)

As per rules I am answering the first 4 subparts of the question 1 Quick ratiocash securities accounts receivable current liabilities 710000439000602000 085 Weak Since the quick ratio is See Answer

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Transcribed Image Text

Comprehensive Ratio AnalysisThe Jimenez Corporation's forecasted 2020 financial statementsfollow, along with some industry average ratios.Jimenez Corporation: Forecasted Balance Sheet as ofDecember 31, 2020AssetsCash$ 71,000Accounts receivable439,000Inventories895,000 Total current assets$1,405,000Fixed assets431,000Total assets$1,836,000Liabilities and EquityAccounts payable$ 332,000Notes payable 110,000Accruals160,000 Total current liabilities$ 602,000Long-term debt403,490Common stock575,800Retained earnings254,710Total liabilities and equity$1,836,000Jimenez Corporation: Forecasted IncomeStatement for 2020Sales$4,290,000Cost of goods sold3,713,000Selling, general, and administrative expenses411,456 Earnings before interest and taxes (EBIT)$ 165,544Interest expense30,000 Earnings before taxes (EBT)$ 135,544Taxes (25%)33,886Net income$ 101,658Jimenez Corporation: Per Share Data for2020EPS$ 4.42Cash dividends per share$ 0.95P/E ratio5.0Market price (average)$22.10Number of shares outstanding23,000Industry RatiosaQuick ratio1.0Current ratio2.7Inventory turnoverb7.0Days sales outstandingc32.0daysFixed assets turnoverb13.0Total assets turnoverb2.6Return on assets9.1%Return on equity18.2%Profit margin on sales3.5%Debt-to-assets ratio21.0%Liabilities-to-assets ratio50.0%P/E ratio6.0Market/Book ratio3.5Notes:aIndustry average ratios have beenstable for the past 4 years.bBased on year-end balance sheetfigures.cCalculation is based on a 365-dayyear.Calculate Jimenez's 2020 forecasted ratios, compare them withthe industry average data, and comment briefly on Jimenez'sprojected strengths and weaknesses. Assume that there are nochanges from the prior period to any of the operating balance sheetaccounts. Do not round intermediate calculation. Round your answersto two decimal places.RatiosFirmIndustryCommentQuick ratio1.0-Select-StrongWeakItem 2Current ratio2.7-Select-StrongWeakItem 4Inventory turnover7.0-Select-PoorHighItem 6Days sales outstandingdays32 days -Select-PoorHighItem 8Fixed assets turnover13.0 -Select-PoorHighItem 10Total assets turnover2.6-Select-PoorHighItem 12Return on assets% 9.1%-Select-BadGoodItem 14Return on equity%18.2%-Select-BadGoodItem 16Profit margin on sales% 3.5%-Select-BadGoodItem 18Debt-to-assets ratio%21.0%-Select-LowHighItem 20Liabilities-to-assets ratio%50.0%-Select-LowHighItem 22P/E ratio6.0-Select-PoorHighItem 24Market/Book ratio3.5-Select-PoorHighItem 26So, the firm appears to be -Select-badlywellItem 27 managed.