The financial statements and industry norms are shown below for Pamplin Inc.

The financial statements and industry norms are shown below for Pamplin Inc.

Given the below:

a. How liquid is the firm?

b. Are its managers generating an adequate operating profit on the firm%u2019s assets?

c. How is the firm financing its assets?

d. Are its managers generating a good return on equity?

2012 2013

Current ratio 6 4

Times interest earned 5 5.625

Inventory turnover 1.27 1.36

Total asset turnover .5 .55

Operating profit margin .20 .24

Operating return on assets .10 .13

Debt ratio .33 .34

Average collection period

$450 / $1020 = .44 $425 / $1232.5 = .34

$450/ ($1020/365) $425 / ($1232.5/365)

$450/2.79 = 161.29 $425/3.37 = 126.11

Fixed-asset turnover 1 1.03

Return on Equity .075 .104