Determine whether janes shoes is profitable

Assignment Help Financial Accounting

Reference no: EM13939194

PREPARATION OF RATIOS

Use Jane's Shoes' financial statements in Problem 12-80A and the following data to respond to the requirements below.

	2009		2008	2007
Average number of common shares outstanding	77,063		76,602	76,067
Accounts receivable	$ 667,547		$ 596,018	$ 521,588
Inventories	592,986		471,202	586,594
Total assets	2,187,463		1,872,861	1,708,430
Shareholders' equity	1,646,026		1,324,149	1,032,789
Stock repurchases	930,111		581,134	288,320
Cash flows from operating activities	190,000		150,000	137,000
Common dividends paid	57,797		45,195	39,555
Dividends per common share	0.75		0.59	0.52
Market price per share:
High	90.25		77.45	54.50
Low	55.00		35.12	26.00
Close	86.33		71.65	43.22
Year Ended December 31,
Industry Averages		2009	2008
Return on equity		25.98%	23.04%
Profit margin		0.05	0.04
Asset turnover		2.24	2.56
Leverage		2.32	2.25

Required:

1. Prepare all the financial ratios for Jane's Shoes for 2009 and 2008.

2. Explain whether Jane's Shoes' short-term liquidity is adequate.

3. Discuss whether Jane's Shoes uses their assets efficiently.

4. Determine whether Jane's Shoes is profitable.

5. Discuss whether long-term creditors should regard Jane's Shoes as a high-risk or a low-risk firm.

6. Perform Dupont analysis for 2008 and 2009.

Reference no: EM13939194

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