The following data pertains to Firm J:
Ratio Firm J Industry Average
ROS 10% 8%
DSO 36 30
TIE 5 5
(a.) Based on the information above, please provide Cross Section Analysis. How would you assess Firm J's performance regarding the given ratios ? If there is a negative assessment, how might the firm improve its outcome ? If there is a positive assessment, what might the firm be doing and need to continue doing well?
(b.) Assuming a Trend Analysis figure of 5% for each of the ratios above, please determine the firm's prior year results for each of the given ratios. Given your Trend Analysis figures, how would you assess the firm's ratio results for the given year (end) presented ? If there is a negative assessment, what actions might the firm take to improve its outcome ? If there is a positive assessment, what might the firm be and need to continue doing well?