4 Juan knows that he should
4. Juan knows that he should compare Quickfix’s condition with an appropriate benchmark. How should he go about obtaining the necessary comparison data?
Based on Quickfix’s industry classification code, Juan should collect industry averages of the key financial ratios. Some useful sources for industry ratios include: Value Line, Moody’s, Standard & Poor, and Dun & Bradstreet. In addition to the industry average, the industry leaders (within the size category) ratios could also be collected from the Internet (e.g. Marketguide.com) and used for comparison.
5. Besides comparison with the benchmark what other types of analyses could Juan perform to comprehensively analyze the firm’s condition?
Perform the suggested analyses and comment on your findings.
Besides comparison with the benchmark, Juan could perform common size analyses of the financial statements and a DuPont analysis of the return on assets and the return on equity.
Quickfix Autoparts
Common Size Income Statement
2000
2000%
2001
2001%
2002
2002%
2003
2003%
2004
2004%
Net sales $600,000
100.0%
$655,000
100.0%
$780,000
100.0%
$873,600
100.0%
$1,013,376
100.0%
Cost of goods sold
480,000
80.0%
537,100
82.0%
655,200
84.0%
742,560
85.0%
861,370
85.0%
Gross profit $120,000
20.0%
$117,900
18.0%
$124,800
16.0%
$131,040
15.0%
$152,006
15.0%
Admin and selling exp
$30,000
5.0%
$15,345
2.3%
$16,881
2.2%
$43,680
5.0%
$40,535
4.0%
Depreciation
25,000
4.2%
25,000
3.8%
50,000
6.4%
50,000
5.7%
50,000
4.9%
Miscellaneous expenses
2,027
0.3%
3,557
0.5%
5,725
0.7%
17,472
2.0%
15,201
1.5%
Total operating exp
$57,027
9.5%
$43,902
6.7%
$72,606
9.3%
$111,152
12.7%
$105,736
10.4%
EBIT $62,973
10.5%
$73,998
11.3%
$52,194
6.7%
$19,888
2.3%
$46,271
4.6%
Interest on ST loans
$15,000
2.5%
$15,950
2.4%
$14,000
Based on Quickfix’s industry classification code, Juan should collect industry averages of the key financial ratios. Some useful sources for industry ratios include: Value Line, Moody’s, Standard & Poor, and Dun & Bradstreet. In addition to the industry average, the industry leaders (within the size category) ratios could also be collected from the Internet (e.g. Marketguide.com) and used for comparison.
5. Besides comparison with the benchmark what other types of analyses could Juan perform to comprehensively analyze the firm’s condition?
Perform the suggested analyses and comment on your findings.
Besides comparison with the benchmark, Juan could perform common size analyses of the financial statements and a DuPont analysis of the return on assets and the return on equity.
Quickfix Autoparts
Common Size Income Statement
2000
2000%
2001
2001%
2002
2002%
2003
2003%
2004
2004%
Net sales $600,000
100.0%
$655,000
100.0%
$780,000
100.0%
$873,600
100.0%
$1,013,376
100.0%
Cost of goods sold
480,000
80.0%
537,100
82.0%
655,200
84.0%
742,560
85.0%
861,370
85.0%
Gross profit $120,000
20.0%
$117,900
18.0%
$124,800
16.0%
$131,040
15.0%
$152,006
15.0%
Admin and selling exp
$30,000
5.0%
$15,345
2.3%
$16,881
2.2%
$43,680
5.0%
$40,535
4.0%
Depreciation
25,000
4.2%
25,000
3.8%
50,000
6.4%
50,000
5.7%
50,000
4.9%
Miscellaneous expenses
2,027
0.3%
3,557
0.5%
5,725
0.7%
17,472
2.0%
15,201
1.5%
Total operating exp
$57,027
9.5%
$43,902
6.7%
$72,606
9.3%
$111,152
12.7%
$105,736
10.4%
EBIT $62,973
10.5%
$73,998
11.3%
$52,194
6.7%
$19,888
2.3%
$46,271
4.6%
Interest on ST loans
$15,000
2.5%
$15,950
2.4%
$14,000