Problems 403
Corrigan Corporation: Forecasted Balance Sheet as of December 31, 2003
Cash $ 72,000
Accounts receivable 439,000
Inventories 894,000
Total current assets $1,405,000
Fixed assets 431,000
Total assets $1,836,000
Accounts and notes payable $ 432,000
Accruals 170,000
Total current liabilities $ 602,000
Long-term debt 404,290
Common stock 575,000
Retained earnings 254,710
Total liabilities and equity $1,836,000
Corrigan Corporation: Forecasted Income Statement for 2003
Sales $4,290,000
Cost of goods sold 3,580,000
Selling, general, and administrative expenses 370,320
Depreciation 159,000
Earnings before taxes (EBT) $ 180,680
Taxes (40%) 72,272
Net income $ 108,408
Per-Share Data
EPS $4.71
Cash dividends per share $0.95
P/E ratio 5
Market price (average) $23.57
Number of shares outstanding 23,000
Industry Financial Ratios (2003)a
Quick ratio 1.0
Current ratio 2.7
Inventory turnoverb 7.0
Days sales outstandingc 32 days
Fixed assets turnoverb 13.0
Total assets turnoverb 2.6
Return on assets 9.1%
Return on equity 18.2%
Debt ratio 50.0%
Profit margin on sales 3.5%
P/E ratio 6.0
P/cash flow ratio 3.5
aIndustry average ratios have been constant for the past 4 years.
bBased on year-end balance sheet figures.
cCalculation is based on a 365-day year.
Analysis of Financial Statements 399
