The Jimenez Corporation's forecasted 2011 financial statements follow, along with some industry average ratios.
Jimenez Corporation: Forecasted Balance Sheet as of December 31, 2011
| Assets |
|
| Cash |
$72,000 |
| Accounts receivable |
439,000 |
| Inventories |
894,000 |
| Total current assets |
$1,405,000 |
| Fixed assets |
431,000 |
| Total assets |
$1,836,000 |
| Liabilities and Equity |
|
| Accounts and notes payable |
$432,000 |
| Accruals |
170,000 |
| Total current liabilities |
$602,000 |
| Long-term debt |
404,290 |
| Common stock |
575,000 |
| Retained earnings |
254,710 |
| Total liabilities and equity |
$1,836,000 |
Jimenez Corporation: Forecasted Income Statement for 2011
| Sales |
$4,290,000 |
| Cost of goods sold |
3,580,000 |
| Selling, general, and administrative expenses |
370,320 |
| Depreciation |
159,000 |
| Earnings before taxes (EBT) |
$180,680 |
| Taxes (40%) |
72,272 |
| Net income |
$108,408 |
| Per-Share Data |
|
| EPS |
$4.71 |
| Cash dividends per share |
$0.95 |
| P/E ratio |
5 |
| Market price (average) |
$23.57 |
| Number of shares outstanding |
23,000 |
| Industry Financial Ratio (2010)* |
|
| Quick ratio |
1.0 |
| Current ratio |
2.7 |
| Inventory turnover** |
7.0 |
| Days sales outstanding*** |
32 days |
| Fixed assets turn over** |
13.0 |
| Total assets turnover** |
2.6 |
| Return on assets |
9.1% |
| Return on equity |
18.2% |
| debt to asset ratio |
50.0% |
| Profit margin on sales |
3.5% |
|
P/E ratio
Liability to assets ratio
|
6.0
50%
|
| P/cash flow ratio |
3.5 |
| *Industry average ratios have been constant for the past 4 years. |
| **Based on year-end balance sheet figures. |
| ***Calculation is based on a 365-day year. |
Calculate Jimenez's 2011 forecasted ratios, compare them with the industry average data, and comment briefly on Jimenez's projected strengths and weaknesses. Round DSO to the nearest whole. Round the other ratios to one decimal place.
| Ratios |
Firm |
Industry |
Comment |
| Quick ratio |
________ |
1.0 |
_________________ |
| Current ratio |
________ |
2.7 |
_________________ |
| Inventory turnover |
________ |
7.0 |
_________________ |
| Days sales outstanding |
________ days |
32 days |
_________________ |
| Fixed assets turnover |
________ |
13.0 |
_________________ |
| Total assets turnover |
________ |
2.6 |
_________________ |
| Return on assets |
________ % |
9.1% |
_________________ |
| Return on equity |
________ % |
18.2% |
_________________ |
|
Debt to asset ratio
liability to asset ratio
|
________ % |
21.0%
50.0%
|
________________
_
|
| Profit margin on sales |
________ % |
3.5% |
_________________ |
| EPS |
$4.71 |
n.a. |
-- |
| Stock Price |
$23.57 |
n.a. |
-- |
| P/E ratio |
________ |
6.0 |
_________________ |
| P/CF ratio |
________ |
3.5 |
_________________ |
| M/B ratio |
0.65 |
n.a. |
-- |
So, the firm appears to be _________________ managed.