week 4 joe s fly by night oil company ratio analysis 501399

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