This website uses cookies to ensure you have the best experience.

# Finance Case Study S&S Air

1798 words - 8 pages

Ratios and financial planning at S&S Air, Inc.
Chris Guthrie was recently hired by S&S Air, Inc., to assist the company with its financial planning and to evaluate the company's performance. Chris graduated from college five years ago with a finance degree. He has been employed in the finance department of a Fortune 500 company since then.
S&S Air was founded 10 years ago by friends Mark Sexton and Todd Story. The company has manufactured and sold light airplanes over this period, and the company's products have received high reviews for safety and reliability. The
company has a niche market in that it sells primarily to individuals who own and fly their-own airplanes. The ...view middle of the document...

50 | 1.43 | 1.89 |
Quick Ratio | 0.64 | 0.84 | 1.05 |
Cash Ratio | 0.08 | 0.21 | 0.39 |
Total Asset Turnover | 0.68 | 0.85 | 1.28 |
Inventory Turnover | 4.89 | 6.15 | 10.89 |
Receivables turnover | 6.27 | 9.82 | 11.51 |
Total Debt Ratio | 0.31 | 0.52 | 0.61 |
Debt-Equity Ratio | 0.58 | 1.08 | 1.56 |
Equity Multiplier | 1.58 | 2.08 | 2.56 |
Times Interest Earned | 5.18 | 8.06 | 9.83 |
Cash Coverage Ratio | 5.84 | 8.43 | 10.27 |
Profit Margin | 4.05% | 5.15% | 6.47% |
Return on Assets | 6.05% | 10.53% | 13.21% |
Return on Equity | 9.93% | 16.54% | 26.15% |

Questions and Answers:

1. Using the financial statements provided for S &S Air, calculate each of the ratios listed in the table for the industry.

Current ratio = Current assets/ Current liabilities
Current ratio = \$3,138,220 / \$2,162,080
Current ratio = 1.45 times

Quick Ratio = (Current assets – Inventory)/ Current liabilities
Quick Ratio = (\$3,138,220 – 1,238,500) / \$2,162,080
Quick Ratio = 0.88 times

Cash Ratio = Cash/ Current liabilities
Cash Ratio = \$365,040 / \$2,162,080
Cash Ratio = 0.17 times

Total Assets Turnover = Sales/ Total assets
Total Assets Turnover = \$20,077,000 / \$15,453,900
Total Assets Turnover = 1.30 times

Inventory Turnover = Costs of goods sold/ Inventory
Inventory Turnover = \$14,985,000 / \$1,238,500
Inventory Turnover = 12.10 times

Receivables Turnover = Sales/ Receivables
Receivables Turnover = \$20,077,000 / \$1,534,680
Receivables Turnover = 13.08 times

Total Debt Ratio = Total debt/ Total Assets
Total Debt Ratio = (\$15,453,900 – 9,466,820) / \$15,453,900
Total Debt Ratio = 0.39 times

Debt-Equity Ratio = Debt/ Equity
Debt-Equity Ratio = (\$2,162,080 + 3,825,000) / \$9,466,820
Debt-Equity Ratio = 0.63 times
Equity Multiplier = 1+ Debt-equity
Equity Multiplier = \$15,453,900 / \$9,466,820
Equity Multiplier = 1.63 times

Times Interest Earned = EBIT/ Interest
Times Interest Earned = \$2,038,000 / \$362,000
Times Interest Earned = 5.63 times

Cash Coverage = (EBIT + Depreciation)/ Interest
Cash Coverage = (\$2,038,000 + 655,000) / \$362,000
Cash Coverage = 7.44 times

Profit Margin = Net Income/ Sales
Profit Margin = \$1,005,600 / \$20,077,000
Profit Margin = 0.0501
Profit Margin = 5.01%

Return on Assets = Net Income/Total assets
Return on Assets = \$1,005,600 / 15,453,900
Return on Assets = 0.0651
Return on Assets = 6.51%

Return on Equity = Net Income/ Total equity
Return on Equity = \$1,005,600 / \$9,466,820
Return on Equity = 0.1062
Return on Equity = 10.62%

2. Mark and Todd agree that a ratio analysis can provide a measure of a company’s performance. They have chosen Boeing as an aspirant company. Would you choose Boeing as an aspirant company? Why or why not?

Boeing probably would not be an ideal aspirant company for S&S Air to use for ratio analysis. This is because both companies...

## Other Papers Like Finance Case Study S&S Air

### Mcs 2100 – Personal Finance Management: Case Study

1862 words - 8 pages MCS 2100 Personal Financial Management Case Study Jingyao Zhang 0626757 November 9th, 2011 MCS 2100 – Personal Finance Management: Case Study Abstract Jane is looking for possible investment ideas in order to obtain her future house down payment. She does not want to spend much time in managing her investments and has a medium-low risk level. Her goal on investment is seeking for growth for down payments on a house if she

### Finance Case Study

831 words - 4 pages analysis: Long-term debt is considerably lower (21.6%) than Company L (46.5%). In addition, gross profit is 59.0%, when we compared is considerably higher than Company L ‘s one which is 7.9%. This justifies high quality operations’ profit-production. Company L: Largest food contractor in the country. Its financing is through off-balance sheet limited partnerships. Data analysis: Long-term debt is 46.5% which justifies that much of its hotel

### Paul''s Case

1705 words - 7 pages future in general. As Western and Pettit point out in their study, “today more than two-thirds of African American male dropouts are expected to serve time in state or federal prison” and this has contributed to a more contemporary class of outsiders that are, in effect dissimilar to the rest of the wider society (Western & Pettit, 2010). In terms of the general population (that is, individuals who are not necessarily young high school drop

### H&S Case Law

3927 words - 16 pages Case Law Database CONTENTS PAGE 2 Summers (John) & Sons v. Frost (1955) - “Absolute Duty” 3 Edwards v. National Coal Board (1949) – “Reasonably Practicable” 4 Marshall v. Gotham & Co Ltd (1954) – “Practicable” 5 Uddin v. Associated Portland Cement Manufacturers Ltd (1965) “Breach of Statutory Duty” 6 Donoghue v. Stevenson (1932) – “Neighbour Principle” 7 Wilsons and Clyde Coal Co. Ltd v

### Case

278 words - 2 pages for Falling Currencies!? Self-assessment: Blades Inc.& Small Business Dilemma. Readings: Topic 3 from Jeff Madura; & Topic 3 from Readings in IFM Handout) Assignment-1(Individual): Article Review – Finance Function in a Global Corporation and Case study 1 Blades Inc.: Decision to Expand Internationally, is due on 7thJuly 2011, 5.30pm. Important Note: All students are required to come prepared as per the session plan given and as clarified surprise test element is part of Class discussion& CP component. With best wishes, Dr Gajavelli V S, Course-facilitator

### Project Finance

2029 words - 9 pages is an arrangement that limits lenders restitution to the project’s collateral but not the other properties of the lenders (Esty, 2006). In case of a default, the non-recourse borrower(s) are not personally held liable for the default. Apart from this unique non-recourse feature, Project Finance structures have bulk of it’s arrangements in tangible assets where all of the projects are pledged to the lenders (Yescombe, 2001; Esty, 2006; Fight

### ACCT 504 Accounting and Finance Managerial Use and Analysis

1091 words - 5 pages Week 5: Long-Lived Assets and Liabilities, and Time Value of Money ACCT 504 Week 5, Case Study 2 Internal Control â€“ LJB Company ACCT 504 Week 6, Stockholdersâ€™ Equity and Statement of Cash Flows ACCT 504 Week 6 Case Study 3 â€“ Cash Budgeting â€“ LBJ Company ACCT 504 Week 7, Financial Analysis: The Big Picture ACCT 504 Week 7 Course Project Financial Statement Analysis Project â€” A Comparative Analysis of Kohlâ€™s Corporation and

### Automotive Sector Assay

633 words - 3 pages * inutes 242 minutes Donner Company Case Study: Analysis of Operating Problems The question here is to identify the decision rule of when to use... Save Paper * Gm Swot Analysis Full-line, edgy-styled high volume luxury brand that competes directly with BMW and Mercedes-Benz. (GM Case, 2009) Chevrolet: Remains GMs high volume brand... Save Paper * Globalisation

### Assignment

5265 words - 22 pages . | | |2 |Case study |Identify sources of finance available to an existing business | |Power point slides and | | |Assessing the implications of the various sources of finance |Be able to assess the implications of the different sources of finance

### Mayo Clinic

905 words - 4 pages Mounties and banks made for \$240 million. Syrian Air suffered in this case because it had incurred a big financial lost. This is the only case of Airbus that led to convictions consequently Syrian air had experience big finance losses. Who suffers from Airbus lapses in ethics are Airbus because of the bad reputation, The Canadian Government because the people will lose their trust in them, the middle man because he is involved in the corruption, and

### Aarkstore - North American Air Compressor Market

1180 words - 5 pages rotary air compressors with new features. Other key players in the market include, Campbell Housfeld, Porter Cable, Kobe Steel, and Sulzer Ltd. KEY BENEFITS This study provides an insightful analysis of the North American air compressor market with current and future trends to identify lucrative investment pockets in the market Current and future trends are outlined to determine the overall market attractiveness and identify profitable

## Related Essays

### M&S Analysis Finance For Managers

1098 words - 5 pages FINANCE FOR MANAGERS  SEMESTER 1 2011/12  ASSIGNMENT 1    Part A.  The primary financial statements produced by a wide range of entities are the balance sheet,  the income statement and the cash flow statement. These statements taken together provide  the essential data required to analyse the financial position and performance of a business.    The  balance  sheet,  also  known  as  the  statement  of  financial  position,  presents

### Biddy`s Bakery Case Study

588 words - 3 pages Assignment1: Biddy`s Bakery Case Study Odontuya Erdenebileg Bus 515 Professor, Dr. Travis Davidson July 18, 2012 Explain the challenge Elizabeth faced in meeting her capacity needs and what she should have considered before moving into the larger facility. However, initially sales were slow at the beginning, after a few years Biddy`s Bakery began to attract an attention of customers thus, first floor of “Biddy`s” home couldn`t

### Sky Air Case Study

1049 words - 5 pages Sky Air Inc.: Business Ethics Case Brock A. Reeves University of St. Thomas Summary of the Case Study Sky Air Inc. was an airline with its head office in Idaho Falls. It came into being in 1986. Its founder, Samuel Kaplan, was once an air force mechanical engineer. Apart from his engineering background, Mr. Kaplan was also a talented golf player. Having been born and brought up in Idaho Falls, Kaplan found out that there was a gap in the

### Case Study Santander Consumer Finance

2065 words - 9 pages Malcolm Barraza FIN4606 23 April, 2013 Case Study Santander Consumer Finance 1. Please describe and evaluate the Country/Political Risk faced by this organization and describe its successes and failures. Having established itself as a strong financial leader within the financing sector of Spain, Santander has shown great strides in the overall growth towards becoming a worldly recognized leader concerning their involvement in finance on a