the following for Joe s Fly-By-Night Oil Company, whose financial statements are shown below:
Joe s Fly-By-Night Oil Company
NET INCOME $1,800
Addition to retained earnings $1,200
Total assets $40,000
Prepare a ratio analysis for the fiscal year ended Dec 31, 2011. 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, 2011 $50.00
Number of common shares outstanding on Dec 31, 2011…1,000