Homework
Homework Assignment – Chapter 1
1. Prepare an analysis of the automobile manufacturing industry using Porter’s five forces framework. For each component force provide support for your conclusion. In addition, at the completion of your analysis provide a conclusion, along with support, of whether you expect the automobile industry to report high or low profitability in the near future.
2. Tremble Company manufactures outdoors wear for women. During 2009, the company reported the following items that affected cash.
Required:
Indicate whether each of these items is a cash flow from operating activities (O), investing activities (I), or financing activities (F).
_____A. Paid cash for supplies
_____B. Purchased equipment by paying cash
_____C. Collected cash on account from customers
_____D. Paid dividends to stockholders
_____E. Paid suppliers for fabric
_____F. Borrowed money from a bank on a long-term note
_____G. Paid interest to bank on the note
_____H. Paid wages to employees
_____I. Sold shares of common stock to new stockholders
3. The following selected financial data pertain to four companies: a hotel, a travel agency, a meat packing company and a pharmaceutical company.
Required: Match each with the financial information and explain why you made your choice as you did.
Balance Sheet Data
(component percentages) Company
1 Company
2 Company 3 Company 4
Cash 7.2 22.0 6.0 11.2
Accounts Receivable 28.0 40.0 3.4 23.0
Inventory 21.4 0.5 0.9 27.4
Property, Plant & Equipment 32.0 19.0 75.1 25.0 Income Statement Data
(component percentages)
Gross Profit 15.2 Not Applicable Not Applicable 44.0
Profit before Taxes 1.8 3.3 2.5 7.0 Ratios
Current ratio (over the last five years) 1.6 1.3 0.5 1.8
Inventory turnover ratio 27.8 Not Applicable Not Applicable 3.4
Debt-to-equity ratio 1.8 2.3 5.8 1.4
4. Use the current asset section of the balance sheets of the El Paso Company as of January 31, 2012
1. Prepare an analysis of the automobile manufacturing industry using Porter’s five forces framework. For each component force provide support for your conclusion. In addition, at the completion of your analysis provide a conclusion, along with support, of whether you expect the automobile industry to report high or low profitability in the near future.
2. Tremble Company manufactures outdoors wear for women. During 2009, the company reported the following items that affected cash.
Required:
Indicate whether each of these items is a cash flow from operating activities (O), investing activities (I), or financing activities (F).
_____A. Paid cash for supplies
_____B. Purchased equipment by paying cash
_____C. Collected cash on account from customers
_____D. Paid dividends to stockholders
_____E. Paid suppliers for fabric
_____F. Borrowed money from a bank on a long-term note
_____G. Paid interest to bank on the note
_____H. Paid wages to employees
_____I. Sold shares of common stock to new stockholders
3. The following selected financial data pertain to four companies: a hotel, a travel agency, a meat packing company and a pharmaceutical company.
Required: Match each with the financial information and explain why you made your choice as you did.
Balance Sheet Data
(component percentages) Company
1 Company
2 Company 3 Company 4
Cash 7.2 22.0 6.0 11.2
Accounts Receivable 28.0 40.0 3.4 23.0
Inventory 21.4 0.5 0.9 27.4
Property, Plant & Equipment 32.0 19.0 75.1 25.0 Income Statement Data
(component percentages)
Gross Profit 15.2 Not Applicable Not Applicable 44.0
Profit before Taxes 1.8 3.3 2.5 7.0 Ratios
Current ratio (over the last five years) 1.6 1.3 0.5 1.8
Inventory turnover ratio 27.8 Not Applicable Not Applicable 3.4
Debt-to-equity ratio 1.8 2.3 5.8 1.4
4. Use the current asset section of the balance sheets of the El Paso Company as of January 31, 2012