Abington Hill Toys

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Finance 301
September 15, 2011

CASE 1 ABINGTON-HILL TOYS, INC.

INTRODUCTION

In the case of Abington-Hill Toys, Inc., Vernon Albright assumed the position of the president of the firm following the death of the Lewis Hill, the last of the original founders. During the last years of Mr. Hill’s control of the firm, the financial condition of the company had deteriorated.

In order to investigate the financial condition of the firm, the new president hired a company comptroller who was experienced in budgetary procedures.
The previous comptroller duties had been handled by Mr. Hill with the assistance of the company’s former chief accountant, Jerald Cohen. As a result of poor prior management and incompetence, the firm was unable to maintain financial health to a substantial degree.

METHODOLOGY

In order to evaluate the financial condition of the firm, a series of calculations have been constructed.

These calculations are the:
* Current Ratio
* Quick Ratio/Acid-Test Ratio
* Inventory Turnover Ratio
* Fixed Asset Turnover Ratio
* Total Asset Turnover Ratio
* Debt Ratio
* Times Interest Earned Ratio
* Gross Profit Margin Ratio
* Net Profit Margin
* Return on Total Assets Ratio
* Return on Net Worth Ratio
* And the Z-Score Ratio.

SOLUTIONS

In the order as presented under methodology, I have solved the series of calculations for evaluating the fiscal condition of the firm Abington-Hill Toys, Inc.

The solutions of the calculations follow the same order as presented under the methodology briefing: * Current Ratio = Current Assets / Current Liabilities = .9665 * Quick Ratio/Acid-Test Ratio = (Current Assets – Inventories) / Current Liabilities = .4482 * Inventory Turnover Ratio = Cost of Goods Sold / Inventory = 6.00x * Fixed Asset Turnover Ratio = Sales / Net Fixed Assets = 1.34x * Total Asset Turnover = Sales / Total Assets = 1.00x

* Debt Ratio = Total Debt / Total Assets =...
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