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Corrigan Corporation: Balance Sheets as of December 31 2018 2017 Cash $ 72,000 $ 65,000 Accounts receivable 439,000 328,000 Inventories 894.000 813,000 $1,405,000 $ 1,206,000 Total current assets Land and building Machinery Other fixed assets 238,000 271.000 132,000 133.000 61,000 57,000 Total assets $1,836,000 $ 1.667.000 Accounts payable $ 80,000 $ 72,708 45,010 40.880 Accrued liabilities Notes payable Total current liabilities 476,990 457.912 $ 602,000 571,500 Long-term debt 404,290 258.898 Common stock 575.000 575,000 254.710 Retained earnings Total liabilities and equity 261.602 $1,836,000 $ 1.667,000 Corrigan Corporation: Income Statements for Years Ending December 31 2018 201 7 Sales $ 3,635,000 $4,240,000 3,680,000 2,980,000 $ 560,000 $ 655,000 303,320 297,550 159,000 154,500 Cost of goods sold Gross operating profit General administrative and selling expenses Depreciation EBIT Interest Earnings before taxes (EBT) Taxes (40%) Net income $ 97,680 $ 202,950 67,000 43,000 30,680 159.950 12,272 63,980 $ 18,408 $ 95,970 Per-Share Data 2018 2017 EPS $ 0.80 $ 4.17 $ 1.10 $0.95 Cash dividends Market price (average) PIE ratio $12.34 $23.57 15.42X 5.65 Number of shares outstanding 23,000 23,000 f. e. Assess Corrigan's market value ratios and determine how its valuation compares with peers and how it has changed over time. Assume the firm's debt is priced at par, so the market value of its debt equals its book value. Calculate Corrigan's ROE as well as the industry average ROE, using the DuPont equation. From this analysis, how does Corrigan's financial position compare with the industry average numbers? g. What do you think would happen to its ratios if the company-initiated cost- cutting measures that allowed it to hold lower levels of inventory and substantially decreased the cost of goods sold? No calculations are necessary. Think about which ratios would be affected by changes in these two accounts Corrigan Corporation: Balance Sheets as of December 31 2018 2017 Cash $ 72,000 $ 65,000 Accounts receivable 439,000 328,000 Inventories 894.000 813,000 $1,405,000 $ 1,206,000 Total current assets Land and building Machinery Other fixed assets 238,000 271.000 132,000 133.000 61,000 57,000 Total assets $1,836,000 $ 1.667.000 Accounts payable $ 80,000 $ 72,708 45,010 40.880 Accrued liabilities Notes payable Total current liabilities 476,990 457.912 $ 602,000 571,500 Long-term debt 404,290 258.898 Common stock 575.000 575,000 254.710 Retained earnings Total liabilities and equity 261.602 $1,836,000 $ 1.667,000 Corrigan Corporation: Income Statements for Years Ending December 31 2018 201 7 Sales $ 3,635,000 $4,240,000 3,680,000 2,980,000 $ 560,000 $ 655,000 303,320 297,550 159,000 154,500 Cost of goods sold Gross operating profit General administrative and selling expenses Depreciation EBIT Interest Earnings before taxes (EBT) Taxes (40%) Net income $ 97,680 $ 202,950 67,000 43,000 30,680 159.950 12,272 63,980 $ 18,408 $ 95,970 Per-Share Data 2018 2017 EPS $ 0.80 $ 4.17 $ 1.10 $0.95 Cash dividends Market price (average) PIE ratio $12.34 $23.57 15.42X 5.65 Number of shares outstanding 23,000 23,000 f. e. Assess Corrigan's market value ratios and determine how its valuation compares with peers and how it has changed over time. Assume the firm's debt is priced at par, so the market value of its debt equals its book value. Calculate Corrigan's ROE as well as the industry average ROE, using the DuPont equation. From this analysis, how does Corrigan's financial position compare with the industry average numbers? g. What do you think would happen to its ratios if the company-initiated cost- cutting measures that allowed it to hold lower levels of inventory and substantially decreased the cost of goods sold? No calculations are necessary. Think about which ratios would be affected by changes in these two accounts

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