Problem #1 (30 marks)
Prepare a ratio analysis for Halifax Sports Inc. using an excel spreadsheet. The firm has 2 million shares authorized and has 1 million shares issued and outstanding.
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Halifax Sports Inc. |
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Halifax Sports Inc. |
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Balance Sheet ($000) |
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Balance Sheet ($000) |
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ASSETS |
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2020 |
2019 |
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2020 |
2019 |
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Current Assets |
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Sales Revenues |
160,000 |
125,000 |
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Cash |
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485 |
9,000 |
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Cost of Goods Sold |
96,000 |
75,000 |
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Short-term Investments |
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10 |
- |
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Contribution Margin |
64,000 |
50,000 |
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Cert. of Deposit |
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5 |
- |
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Operating Expenses |
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Accounts Receivable |
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16,000 |
12,500 |
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Salaries |
11,000 |
11,000 |
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Inventory |
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45,500 |
29,000 |
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Wages |
16,000 |
12,500 |
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Total Current Assets |
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62,000 |
50,500 |
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General/Admin |
10,000 |
10,000 |
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Land |
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26,000 |
20,000 |
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Amort/Depr. |
10,000 |
4,500 |
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Buildings and Equipment |
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100,000 |
70,000 |
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Interest |
6,100 |
3,000 |
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Accumulated Amortization |
38,000 |
28,000 |
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Earnings B4 Taxes |
10,900 |
9,000 |
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Net Plant & Equipment |
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88,000 |
62,000 |
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Taxes |
5,450 |
4,500 |
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TOTAL ASSETS |
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150,000 |
112,500 |
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Earnings After tax |
5,450 |
4,500 |
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LIABILITIES and SHAREHOLDERS' EQUITY |
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Current Liabilities |
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Accounts Payable |
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22,000 |
10,500 |
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Bank Note |
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40,000 |
10,000 |
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Taxes Payable |
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2,500 |
2,000 |
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Accrued Expenses |
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4,500 |
5,000 |
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Total Current Liabilities |
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69,000 |
27,500 |
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Long Term Debt |
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First Mortgage Bonds |
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20,000 |
22,000 |
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Debenture Bonds |
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2,950 |
6,750 |
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Total Liabilities |
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22,950 |
28,750 |
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Equity |
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Common Shares |
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31,500 |
31,500 |
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Retained Earnings |
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26,550 |
24,750 |
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Total Equity |
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58,050 |
56,250 |
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a) Using an excel spreadsheet calculate the following for both years: 30 marks
NOTE: the use of the excel spreadsheet is mandatory and the excel spreadsheet must be embedded in the word document. Submitting a separate file to the spreadsheet is not acceptable.
If the spreadsheet is not used, a mark of 0 will be applied to the question.
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Industry |
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Ratio |
Formula |
Values |
Calculation |
Average |
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Current Ratio |
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4.20 |
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Quick Ratio |
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2.10 |
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Receivables turnover |
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9.86 |
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Day's Sales in Recievables |
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37.00 |
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Inventory Turnover |
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2.50 |
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Day's Sales in Inventory |
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146.00 |
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Debt to Total Assets |
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58.00% |
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Times Interest Earned |
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3.80 |
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Total Asset Turnover |
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1.14 |
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Fixed Asset Turnover |
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1.40 |
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Return on Total Assets |
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4.00% |
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Return on Equity |
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15.00% |
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Gross Profit Margin |
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38.00% |
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Operating Profit Margin |
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10.00% |
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Profit Margin |
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3.50% |
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You need to show your work for your calculations. For example |
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Equity Multiplier |
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Assets |
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150,000 |
2.584 |
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Equity |
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58,050 |
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b) Complete the cash flow statement for 2020 using an excel spreadsheet. (5 marks)
c) Complete the Sources and Uses Statement for 2020 using an excel spreadsheet. (5 marks)
d) Complete the Cash Flow Identity Statement for 2020 using an excel spreadsheet. (5 marks)
e) Complete common size statements for both the income statement and balance sheets for both years using an excel spreadsheet. (10 marks)
f) Use the Dupont ratio to calculate the ROE and which ratio should the firm try to improve?
(4 marks)
Part a is already solved, I just need b, c, d, e, and f thanks
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