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The Finnerty Furniture Company a manufacturer and wholesaler of high quality home furnishings has experienced low profitability in recent years As a result the board of directors has replaced the

The Finnerty Furniture Company, a manufacturer and wholesaler of high-quality home furnishings, has experienced low profitability in recent years. As a result, the board of directors has replaced the president of the firm with a new president, Elizabeth Brannigan, who has asked you to make an analysis of the firm s financial position using the DuPont chart. The most recent industry average ratios and Finnerty s financial statements are as follows: Finnerty Furniture Company: Income Statement for Year Ended December 31, 2012 ($ million) Net sales...................................................................$795.0 Cost of goods sold.......................................................(660.0) Gross profit...............................................................$135.0 Selling expenses.........................................................( 73.5) Depreciation expense....................................................( 12.0) Earnings before interest and taxes (EBIT)............................$ 49.5 Interest expense............................................................( 4.5) Earnings before taxes (EBT) ...........................................$ 45.0 Taxes (40%)...............................................................( 18.0) Net income................................................................$ 27.0 a. Calculate those ratios that you think would be useful in this analysis. b. Construct a DuPont equation for Finnerty and

 

Apr 30 2020 View more View Less

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