Question: Populate the answers in the Financial ratios Word .doc chart for years 2006, 2007, and 2008 based on the financial statements on pages in the Darlanrna Furniture Ltd (910B02) case study.
- Comment on the differences between case study ratios and the industry averages.
- Conduct a vertical analysis of income statements, balance sheets, and cash flow statements.
- Determine the trends evident in the financial statements
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Liquidity
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2006
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2007
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2008
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Industry average
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Current ratio
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2.5
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Cash ratio
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0.5
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Asset Management
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Inventory turnover in days
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90
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A/R turnover in days
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60
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A/P turnover in days
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15
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Cash conversion cycle
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135
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Fixed asset turnover ration
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4.01
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Total asset turnover ration
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2.21
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Long-Term Debt Paying Ability
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Long-term debt to total capitalization
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30%
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Cash flow coverage
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3.21
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Effective interest rate
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8%
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Maximum borrowing
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-
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Profitability
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Gross profit margin
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45%
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Operating profit margin
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25%
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Net profit margin
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10%
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ROA
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22%
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ROE
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31%
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