a.) Why are ratios useful? What are the five major categories of ratios?
b.) Calculate Everelite’s 2009 current and quick ratios based on the projected balance sheet and income statement data. What can you say about the company’s liquidity positions in 2007, in 2008, and as projected for 2009? We often think of ratios as being useful (1) to managers’ help run the business. (2) to bankers for credit analysis and (3) to stockholders for stock valuation. Would these different types of analysts have an equal interest in the company’s liquidity ratios?
c.) Calculate the 2009 inventory turnover, days sales outstanding (DSO), fixed assets turnover,and total assets turnover. How does Everelite’s utilization of assets stack up against other firms in the industry?
d.) Calculate the 2009 debt and times-interest-earned ratios. How does Everelite compare withthe industry with respect to financial leverage? What can you conclude from these ratios?
e.) Calculate the 2009 operating margin, profit margin, basic earning power (BEP), return on assets (ROA), and return on equity (ROE). What can you say about these ratios?
f.) Calculate the 2009 price/earnings ratio and market/book ratio. Do these ratios indicate that investors are expected to have a high or low opinion of the company?