Your company is considering the possible acquisition of Growth, Inc. The financial statements of…
Your company is considering the possible acquisition of Growth, Inc. The financial statements of Growth, Inc., follow:Partial notes: Under the LIFO method, inventories have been reduced by approximately $35,300 and $41,100 at December 31, 2009 and 2008, respectively, from current cost, which would be reported under the first-in, first-out method.The effective tax rates were 36.6%, 30.7%, and 31.4%, respectively, for the years ended December 31, 2009, 2008, and 2007.Requireda. Compute the following for 2009, without considering the LIFO reserve:Liquidity1. Days’ sales in inventory2. Merchandise inventory turnover3. Inventory turnover in days4. Operating cycle5. Working capital6. Current ratio7. Acid-test ratio8. Cash ratioDebt1. Debt ratio2. Debt/equity ratio3. Times interest earnedProfitability1. Net profit margin2. Total asset turnover3. Return on assets4. Return on total equityb. Compute the ratios in part (a), considering the LIFO reserve.c. Comment on the apparent liquidity, debt, and profitability, considering both sets ofratios.
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Your company is considering the possible acquisition of Growth
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