Copy the Stetson Skydiving Adventures financial statements from Problem 1 in Chapter 2 into a new workbook.
a. Set up a ratio worksheet similar to the one in Exhibit 4-4, page 124, and calculate all of the ratios for Stetson Skydiving Adventures.
b. Identify at least two areas of potential concern using the ratios. Identify at least two areas that have shown improvement.
c. In 2011 Stetson Skydiving Adventures's ROE increased. Explain, in words, why this increase occurred using the Du Pont method as shown in equation (4-29).
d. Stetson Skydiving Adventures has shown an accounting profit in each of the past two years. Calculate their economic profit for these years and compare it to net income. Assume that the weighted average cost of capital is 11%
e. Using Altman's model for privately held firms, calculate the Z-score for Stetson Skydiving Adventures. Does it appear that the firm is in imminent danger of bankruptcy?
