Their current and quick ratio is below average and they have more debt than average industries. The firm does not currently pay a cash dividend, and return to the investor must come from selling the stock in the future.
The file is in Excel. Al Thomas has recently been approached by his brothe Asset utilization ratios will show us why a firm can Watson leisure time sporting goods over its assets more rapidly than another.
Watson Leisure Time Sporting Goods had a great increase in sales; their sales grew 44 percent from previous year.
The annual growth rate is 20 percent. With their debt possibility becoming unmanageable could be a reason for their need of Mr.
Now with their return on equity we see that previous and current year Watson Leisure Time Sporting Goods return on equity is higher than the industry. On the current year its returns on assets is actually lower 6.
After doing a thorough analysis including ratios for each year and comparisons to the industrywhat comments and recommendations do you offer to Mr. I have all of this completed but am having issues with one part. Retrieved July 23,from Financial Pipeline.
The issue here is not to determine the exact price for the stock, but rather whether Watson Leisure Time Sporting Goods represents an attractive investment situation.
Knowing the profitability and asset utilization for the firm what we need to analyze now is the liquidity of the firm. In Foundations of Financial Management pp. This content can be found on the following page: Watson Leisure Time Sporting Goods and the industry collected their receivables the same.
Their return on equity is good which means they have high debt-to-assets ratio. There was a steady real growth of 2 to 3 percent in gross domestic product during the period under study.
The firm turns over its inventory the previous and current year faster than the industry. They have processed a capital budgeting analysis including the Net present value NPV method that determined if the investment was going to be beneficial for the business.
Note the industry growth rate in sales is only approximately 10 percent per year.
I the current year there is a big difference, the industry collected their receivable faster This is because the industry has a more rapid turnover of assets than generally found within the firm. In which I need someone to help me figure out what I am doing wrong.
A balance sheet for a similar time period is shown in Exhibit 2, and selected industry ratios are presented in Exhibit 3. The firm has been able to turn low return on sales profit margin into a good return on asset and a higher relative return on equity, with a high debt-to-assets ratio.
When analyzing profitability ratios, we found that Watson Leisure Time Sporting Goods shows a higher return on the sales dollar 6. The rate of inflation was in the 3 to 4 percent range. Now the firm maintains a higher ratio of sales to fixed assets than the industry for both previous and current year 3.
Al Thomas has recently been approached by his brother-in-law, Robert Watson, with a proposal to buy a 20 percent interest in Watson Leisure Time Sporting Goods. This shows that Watson Leisure Time Sporting Goods generates more sales per dollar of inventory than the average company in the industry; by this we can tell the firm has efficient inventory-ordering and cost-control methods.View the step-by-step solution to: WATSON LEISURE TIME SPORTING GOODS Exhibit 1 Income Statement Sales (all on credit) Cost of Goods.
Tutorials for Question - WATSON LEISURE TIME SPORTING GOODS Exhibit 1 Income Statement Trend Analysis Sales categorized under Business and Finance. Watson Leisure Time Sporting Goods Scenario: Al Thomas has recently been approached by his brother-in-law, Robert Watson, with a proposal to buy a 20 percent interest in Watson Leisure Time Sporting Goods.
The company manufactures golf clubs, baseball bats, basketball goals, and other similar items. Watson Leisure Time Sporting Goods 1 Watson Leisure Time Sporting Goods Devry University BUSN This preview has intentionally blurred sections. Sign up. When analyzing profitability ratios, we found that Watson Leisure Time Sporting Goods shows a higher return on the sales dollar ( percent) than the industry average of percent the previous year; but on the current year the return on the sales dollar it’s actually lower ( percent) than the industry percent.
Although 39% is a good gross profit margin, there are two ways that Watson Sporting Goods can improve it.
First, they can increase their prices. Second, they can decrease the costs to produce their goods.3/5(2).Download