BUSN 5200 Homework Assignment for Week 4:


Homework Assignment for Week 4:

For Week 4, please complete the following for Joe’s Fly-By-Night Oil Company, whose financial statements are shown below:

• Prepare a ratio analysis for the fiscal year ended Dec 31, 2012. Organize your analysis per the following outline:

(1) Liquidity
– Current ratio
– Quick ratio
Comments on liquidity

(2) Asset management
– Total Asset turnover
– Average collection period (ACP)
Comments on asset management

(3) Debt management
– Debt ratio
– Times interest earned
Comments on debt management

(4) Profitability
– Net profit margin
– Return on Assets (ROA)
– Return on Equity (ROE)
– Extended Du Pont equation
Comments on profitability to include your comments on the sources of ROE
revealed by the Du Pont equation

(5) Market value ratios
– PE ratio
– Market to book ratio
Comments on the market value ratios

For the purposes of this exercise, assume the following data for Joe’s Fly-By-Night Oil:

Stock price on Dec 31, 2012…$50.00
Number of common shares outstanding on Dec 31, 2012…1,000