Start with the partial model in the file Ch 10 P12 Build a Model.xls from the textbookĂ˘â‚¬â„˘s web site. This problem requires you to further analyze the financial data given for Cumberland Industries in the Build a Model problem for Chapter 9. Cumberland IndustriesĂ˘â‚¬â„˘ common stock has increased in price from $14.75 to $17.25 from the end of 2001 to the end of 2002, and its shares outstanding increased from 9 to 10 million shares during that same period. Cumberland has annual lease payments of $75,000 (which is included in operating costs on the income statement), but no sinking fund payments are required. Now answer the following questions. Using CumberlandĂ˘â‚¬â„˘s financial statements as given in the Chapter 9 Build a Model problem, perform a ratio analysis for 2001 and 2002. Consider its liquidity, asset management, debt management, profitability, and market value ratios.
a. Has CumberlandĂ˘â‚¬â„˘s liquidity position improved or worsened? Explain.
b. Has CumberlandĂ˘â‚¬â„˘s ability to manage its assets improved or worsened? Explain.
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c. How has CumberlandĂ˘â‚¬â„˘s profitability changed during the last year?
d. Perform an extended Du Pont analysis for Cumberland for 2001 and 2002.
e. Perform a common size analysis. What has happened to the composition (that is, percentage in each category) of assets and liabilities?
f. Perform a percent change analysis. What does this tell you about the change in profitability and asset utilization?