The assignment focuses on ratio analysis: drawing insights about the company from its financial statements. Please use the data for Cardinal Company found in the attached Excel spreadsheet to answer the following questions.
1.Calculate Cardinal’s 2022 Current and Quick ratios. What do you observe about the trend of the company’s liquidity positions from 2020 to 2022?
2.Calculate the 2022 Inventory Turnover, Days Sales Outstanding, Fixed Assets Turnover, and Total Assets Turnover ratios. Compared to past years, is Cardinal’s efficiency improving or getting worse? Explain.
3.Calculate the 2022 Debt-to-Assets and Times-Interest-Earned ratios. As a creditor, how would you feel about lending money to Cardinal Company? Explain.
4.Calculate the 2022 Profitability ratios. Focusing on the Gross Profit Margin and Net Profit Margin versus the industry average, what accounts for their difference?
5.Calculate the Return on Equity (ROE) for 2022 using the DuPont methodology (you must show your work). Use the individual components of the DuPont equation to explain why Cardinal’s ROE differed from the industry average.
6.Calculate the 2022 Price/Earnings and Market/Book ratios. Do these ratios indicate that investors currently have high or low expectations for the company’s future prospects?
