FIN 571 NERD Education Specialist /fin571nerd.com FIN 571 NERD Education Specialist /fin571nerd.com | Page 35

Please post your homework as a word.doc or excel file in the class
discussion section below by the due date.
1. Analysis of cost of goods sold problem.
1992
1993
1994
Gross Profit Margin
60% 55%
51%
What is happening to cost of goods sold? As was done in the week 2
online lecture on ratio analysis, please assume sales of 1 dollar each
year as you do your analysis. This problem follows the process
shown in the Week 2 Ratio Analysis online lecture section titled:
"Another Income Statement Analytical Approach: Percent of Sales"
(5 points)
2. Overhead (or Sales, General and Administrative Expense)
problem.
1992
1993
1994
Gross Profit Margin
40%
39%
41%
Operating Margin (NOI/Sales)
15%
10%
5%
What is happening to S,G and A (or overhead expenses)? Please set
up an illustration assuming sales of 1.00 dollar each year just as you
did in problem number one.
(5 points)
3. Balance Sheet Problem
1992
1993
1994
Annual Sales Growth (over prior yr)
+ 1%
0%
+1%
Current Ratio
3.5X
2X
1.2X
Average Collection Period
25 days 30 days
55 days
What is happening to liquidity? Why? What are some follow-up
questions your would ask? (5 points)
4. Using the data provided below, which is the better managed