Dana Dairy Products Key Ratios

1. ____Financial managers actively manage the financial affairs of many types of business--financial and non-financial, private and public, for-profit and not-for-profit.
2. ____Financial analyst administers the firm’s credit policy by analyzing or managing the evaluation of credit applications, extending credit, and monitoring and collecting accounts receivable.
3. ____The board of directors is responsible for managing daytoday operations and carrying out the policies established by the chief executive officer.
4. ____In S corporations, stockholders receive all of the organizational benefits of a corporation and the tax advantages of a partnership, but lose certain tax advantages related to pension plans that are available to traditional corporations. Dana Dairy Products Key Ratios

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                                    Dana        Industry Average
        2008            2009

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Current Ratio 1.3 1.0
Quick Ratio 0.8 0.75
Average collection Period 23 days 30 days
Inventory Turnover 21.7 19
Debt Ratio 64.7% 50%
Times Interest Earned 4.8 5.5
Gross Profit Margin 13.6% 12.0%
Net Profit Margin 1.0% 0.5%
Return on total assets 2.9% 2.0%
Return on Equity 8.2% 4.0%

Income Statement
Dana Dairy Products
For the Year Ended December 31, 2009

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Sales Revenue $100,000
Less: Cost of Goods Sold 87,000

Gross Profits $ 13,000
Less: Operating Expenses 11,000

Operating Profits $ 2,000
Less: Interest Expense 500

Net Profits Before Taxes $ 1,500
Less: Taxes (40%) 600

Net Profits After Taxes $ 900

Balance Sheet
Dana Dairy Products
December 31, 2009

ASSETS

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Cash $ 1,000
Accounts Receivable 8,900
Inventories 4,350

Total Current Assets $14,250

Gross Fixed Assets $35,000
Less: Accumulated Depreciation 13,250
Net Fixed Assets 21,750

Total Assets $36,000

LIABILITIES & STOCKHOLDER”S EQUITY

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Accounts Payable $ 9,000
Accruals 6,675
--
Total Current Liabilities $15,675
Longterm Debts 4,125

Total Liabilities $19,800

Common Stock 1,000
Retained Earnings 15,200
--
Total Stockholders' Equity $16,200
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Total Liab. & S.E. $36,000

MULTIPLE CHOICE

1. The current ratio for Dana Dairy Products in 2009 is __. (See Figure above)
   A. 1.58
   B. 0.63
   C. 1.10
   D. 0.91
2. Since 2008, the liquidity of Dana Dairy Products __. (See Figure 402.)
   A. has deteriorated
   B. remained the same
   C. has improved
   D. cannot be determined
3. The inventory turnover for Dana Dairy Products in 2009 is __. (See Figure 402.)
   A. 43
   B. 5
   C. 20
   D. 25
4. The average collection period for Dana Dairy Products in 2009 is (See Figure 402.)
   A. 32 days.
   B. 11 days.
   C. 25 days.
   D. 35 days.
5. If Dana Dairy Products has credit terms which specify that accounts receivable should be paid in 25 days, the average collection period __ since 2008. (See Figure 402.)
   A. has deteriorated
   B. remained the same
   C. has improved
   D. cannot be determined
6. The debt ratio for Dana Dairy Products in 2009 is (See Figure 402.)
   A. 50 percent.
   B. 11 percent.
   C. 55 percent.
   D. 44 percent.

11) Essay: Evaluate the financial results of Dana Dairy Products for fiscal year end 2009 in the following areas; liquidity, activity, debt, profitability, and market.

1. The future value of $100 received today and deposited in an account for four years paying semiannual interest of 6 percent is_________.
   A. $450.
   B. $126.
   C. $889.
   D. $134.
2. The future value of $200 received today and deposited for three years in an account which pays semiannual interest of 8 percent is __.
   A. $253.00
   B. $252.00
   C. $158.00
   D. $134.66
3. The future value of $100 received today and deposited at 6 percent for four years is
   A. $126.
   B. $ 79.
   C. $124.
   D. $116.

15-19. Calculate the present value of the annuity assuming that it is an ordinary annuity.
Case Amount of Annuity Interest Rate Period / Years
A $14,000 9% 3
B $17,500 13% 15
C $975 18% 7
D $1,127,000 4% 9
E $10,000 7% 3

20-24. For each of the cases shown below in the table, calculate the present value of the cash flow:
Case Single Cash Flow Interest Rate End of Periods / Years
A $13,000 10% 5
B $34,000 17% 25
C $16,000 6% 18
D $210,000 15% 15
E $90,000 20% 9

25-29 For each of the cases shown below in the table, calculate the future value of the cash flow:
Case Single Cash Flow Interest Rate End of Periods / Years
A $3,000 10% 7
B $44,000 12% 5
C $6,000 8% 10
D $27,000 16% 12
E $99,000 20% 6

Extra credit( 10 points):
Calculate the above future values in questions 25-29 as semi-annual and quarterly compounding.