4-25 Ratio analysis the Corrigan Corporation’s 2010 and 2011 financial statements follow, along with some industry average ratios

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

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