4-25 Ratio analysis the Corrigan Corporation’s 2010 and 2011 financial statements follow, along with some industry average ratios.
a. Assess Corrigan’s liquidity position, and determine how it compares with peers and how the liquidity position has changed over time.
b. Assess Corrigan’ asset management position, and determine how it compares with peers and how its asset management efficiency has changed over time.
c. Assess Corrigan’s debt management position, and determine hoe it compares with peers and how its debt management has changed over time.
d. Assess Corrigan’s profitability ratios, and determine how they compare with peers and how the profitability position has changed over time.
e. Assess Corrigan’s market value ratios, and determine hoe their valuation compares with peers and how it has changed over time.
f. Calculate Corrigan’s ROE, as well as the industry averages, ROE, using the extended pare with the industry average numbers?
g. What do you thing would happen to its ratios if the company initiated cost-cutting measures that allowed it to hold lower levels of inventory and substantially decreased the cost of goods sold? No calculations are necessary. Think about which ratios would be affected by changes in these two accounts.
Corrigan Corporation: Balance Sheets as of December 31
2005 2004
Cash 72,000 65,000 Accounts receivable 439,000 328,000 Inventories 894,000 813,000 Total current assets 1,405,000 1,206,000 Land and building 238,000 271,000 Machinery 132,000 133,000 Other fixed assets 61,000 57,000 Total assets 1,836,000 1,667,000 Accounts and notes payable 432,000 409,000 Accrued liabilities 170,000 162,000 Total current liabilities 602,000 571,500 Long –term debt 404,290 258,898 Common stock 575,000 575,000 Retained earnings 254,710 261,602 Total liabilities and equity 1,836,000 1,667,000
File name: 4-25-Ratio-analysis-the-Corrigan-Corporation.doc File type: application/msword Price: $12
File name: 4-25-Ratio-analysis-the-Corrigan-Corporation.doc File type: application/msword Price: $12
