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DUR Problem 9-19 Joseph Berio is a loan officer with the First Bank of Tennessee, Red Brick, Inc., a major producer of masonry products, has applied for a short-term loan. Red Brick supplies building material throughout the southern states, with brick plants located in Tennessee, Alabama, Georgia and Indiana The firm's income statement and balance sheet are given below. The third table presents both a ratio analysis of Red Brick's previous year's financial statements and the industry averages of the ratios Red Brick Income Statement (for the period anding December 12/31/20X1) $222,000,000 Cost of goods sold 115,000,000 Administrative expenses 21,000,000 Operating income $ 85,000,000 Interest expense 11,000,000 Taxes 300,000 Net income $74,700,000 Sales Red Brick Balance Sheet as of 12/31/20X2 Assets Liabilities and Stockholders' Equity Cash $ 700,000 Accounts payable $ 39,000,000 Accounts receivable 25,000,000 Notes payable 14,000,000 Inventory 78,600,000+ Long-term debt 41,000,000 Plant and equipment 126,000,000 Stockholders' equity 136,300,000 $230,300,000 $ 230,300,000 Non credit Prevaranty was 57.100.000 Company's Ratios Industry (Previous Year) Average Current ratio 1.7:1 2.411 Quick ratio 0.5:1 0.91 Inventory turnover 5.4x Average collection period 32 days 53 days Debt ratio (debu/total assets) 32 42% Times interest-earned 7.8 3.7 Return on equity 61.8 14.24 Return on assets 36.1% 10.3 Operating profit margin 29.8% 15.09 Net profit margin 25.99 3.99 To help decide whether to grant the loan, compute the following ratios and compare the results with the company's previous year ratios and industry averages. Assume there are 365 days in a year. Do not round intermediate calculations. Round your answers to two decimal places Ch 09: End of Chapter Problems Analysis of Financial Statements an X BURY 40, $230,300,000 35,300, $ 230,300,000 * Devi 100,000 Company's Ratios Industry (Previous Year) Average Current ratio 1.7:1 2.4:1 Quick ratio 0.5-1 0.9:1 Inventory turnover Average collection period 32 days 53 days Debt ratio (t/total assets) 32 42 Times-interest carned 7,8 3.7 turn on culty 61.8% 14.2 Return on assets 36.14 10.3% Operating profit margin 29.8% 15.09 Net profit margin 25.9% To help decide whether to grant the loan, compute the following ratios and compare the results with the company's previous year ratios and industry averages. Assume there are 365 days in a year. Do not round intermediate calculations, Round your answers to two decimal places Current ratio of messert the industry average and see the ratio in the previous year Quick ratio of times is to the industry average and let the rate in the previous year Inventory turnover ratio of set the industry average and the ratio in the previous year Average collection period of days Estev the industry average and see the ratio in the previous year. Debt ratio of the industry average and let the ratio in the previous war Times interested ratio of is y the industry average and the ratio is the previous year Return on equity ratio of the industry average and the ratio in the previous year Return on assess rate of the oustry average and the ratio in the previous year. Operating profit marginate of Wild the industry average and the ratio in the previous your Net oroft margin ratio of ES the industry average and C the role in the previous year Joseph Berio is loan officer with the First Bank of Tennessee, Red Brick, Inc., a major producer of masonry products, has spolied for a short-term loan/ Red Brick supplies building material throughout the The firm's income statement and balance sheet are given below. The third table presents both a ratio anelvak of Red Brick's previous year's Pancial statements and the industry averages of the ration Red Brick Income Statement (for the period ending December 12/31/20X1) Sales 1272,000,000 Cost of goods sold 115,000,000 Administrative expenses 21,000,000 Operating income $ 56,000,000 Interest expense 11,000,000 300,000 574,700,000 Taxes Net income Red Brick Income Statement (for the period ending December 12/31/20X1) Sales $222,000,000 Cost of goods sold 115,000,000 Administrative expenses 21,000,000 Operating income $ 86,000,000 Interest expense 11,000,000 Taxes 300,000 Net income $ 74,700,000 Red Brick Balance Sheet as of 12/31/20X2 Assets Liabilities and Stockholders' Equity Cash $ 700,000 Accounts payable $ 39,000,000 Accounts receivable 25,000,000* Notes payable 14,000,000 Inventory 78,600,000+ Long-term debt 41,000,000 Plant and equipment 126,000,000 Stockholders' equity 136,300,000 $230,300,000 $ 230,300,000 *80% of sales are on credit. + Previous year's inventory was $57,100,000. Current ratio Quick ratio Inventory turnover Average collection period Debt ratio (debt/total assets) Times-interest-earned Return on equity Return on assets Operating profit margin Net profit margin Company's Ratios Industry (Previous Year) Average 1.7:1 2.4:1 0.5:1 0.9:1 5.4x 4.5x 32 days 53 days 32% 42% 7.8 3.7 61.8% 14.2% 36.1% 10.3% 29.8% 15.0% 25.9% 8.9% Ch 09 End-of-Chapter Problems - Analysis of Financial Statements Scho DUCATO 10. $230,300,000 230,300,000 eritory 30.000 Company's Ratios Industry (Previous Year) Average Current ratio 1.71 24:1 Quick ratio 0.51 0.911 Inventory turnover 5.4 4 5 Average collection period 32 days 53 days Det ratio (det/total assets) 32% 42% Times-interesteamed 7. 3.7 Return on equity 618 14.29 Return on es 36.14 10.3% Operating profit margin 29.09 15.04 Net profit margin 25.99 11.99 To he decide whether to grant the loan, compute the following ratios and compare the results with the company's previous year ruties and industry averages. Assume there are 365 days in year. Do not round intermediate Calculations. Round your answers to two decimal plan Current ratio of times in the industry average and the rate in the previous year Quick rate of times is the industry average and the ratio in the pred year Inventory burnover ratio of the industry average and the ratio in the previous year Average collection period of days is the industry average and there in the previous year Dettate of the industry average and the ratio in the previous year Times-interest earned ratio of ist the industry average and the ratio in the previous year Return on equity ratio of the industry average and we the ratio in the previous yer Retumos assets ratio of the industry average and C the nation the previous Operating profit margin ratio of Vid the industry average and it the rotor the previous ye. Net profit margin ratio of set v the industry average and the rate in the previous year

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