Calculate the given ratios based on year-end totals

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Reference no: EM131061285

Case Study 1:  Financial Statement Analysis

Introduction: Gemini Electronics

Sarah McIvor, CA, a junior partner with Price Waterhouse Coopers, has been selected to conduct a financial review of Gemini Electronics Ltd. Gemini is an "up- start" American electronics company who recently went public and now wants to expand its business to rival the major Korean and Japanese producers. Before the company finalizes any expansion plans, Dr. Wang, the founder, feels it is prudent to conduct an independent evaluation of Gemini's financial condition.

The two-page evaluation memo should be divided into sections entitled liquidity, asset management, long-term debt paying ability, profitability, and recommendations. It should be single-spaced, 11-point Arial font with 0.7 inch margins. All headings should be in 12-point bold font.

In addition to the two-page memo, the following financial exhibits for 2005 through 2009 should be included:

  • ratio table
  • vertical analysis of income statements and balance sheets
  • horizontal analysis (index numbers) of income statements and balance sheets
  • cash flow statements (2006 through 2009)
  • five-part analysis of ROE

All ratios should be calculated based on year-end totals only-no averages should be used. The specific ratios to be used include the following:

 

2005

2006

2007

2008

2009

Industry Average

Liquidity

 

 

 

 

 

 

Current ratio

 

 

 

 

 

 

Cash ratio

 

 

 

 

 

 

Asset Management

 

 

 

 

 

 

Parts inventory turnover in days

 

 

 

 

 

 

Work-in-progress turnover in days

 

 

 

 

 

 

Finished goods turnover in days

 

 

 

 

 

 

A/R turnover in days

 

 

 

 

 

 

A/P turnover in days

 

 

 

 

 

 

Cash conversion cycle

 

 

 

 

 

 

Fixed assets turnover

 

 

 

 

 

 

Total asset turnover

 

 

 

 

 

 

Long-term debt paying ability

 

 

 

 

 

 

Debt Ratio

 

 

 

 

 

 

Long-term debt to total capitalization

 

 

 

 

 

 

Times Interest Earned

 

 

 

 

 

 

Cash flow coverage

 

 

 

 

 

 

Profitability

 

 

 

 

 

 

Gross margin

 

 

 

 

 

 

Operating profit margin

 

 

 

 

 

 

Net profit margin

 

 

 

 

 

 

ROA

 

 

 

 

 

 

ROE

 

 

 

 

 

 

Analysis of ROE

 

EBIT/Sales

EBT/EBIT

NI/EBT

Total Asset Turnover

Debt Ratio

ROE

2005

 

 

 

 

 

 

2006

 

 

 

 

 

 

2007

 

 

 

 

 

 

2008

 

 

 

 

 

 

2009

 

 

 

 

 

 

Attachment:- Case-Gemini-Electronics.pdf

Reference no: EM131061285

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