# Ratio analysis for financial statements - Accounts Ratio Analysis

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```					              Sub: Accounts                                                                    Topic: Ratio analysis

Question:
Analysis of financial statement using ratio analysis

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Cross-sectional ratio analysis

Use the financial statements below and on page 84 for Fox Manufacturing Company for the
year ended December 31, 2006, along with the industry average ratios also given in what
follows, to:

a. Prepare and interpret a complete ratio analysis of the firm’s 2006 operations.
b. Summarize your findings and make recommendations.

Fox Manufacturing Company
Income Statement for the Year Ended December 31, 2006

Sales revenue                                                                                     \$600,000

Less: Cost of goods sold                                                                            460,000

Gross profits                                                                                     \$140,000

Less: Operating expenses

Depreciation expense                                                           30,000

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Sub: Accounts                                                                    Topic: Ratio analysis

Fox Manufacturing Company
Income Statement for the Year Ended December 31, 2006

Total operating expense                                              60,000

Operating profits                                                                                         \$
80,000

Less: Interest expense                                                                               10,000

Net profits before taxes                                                                                  \$
70,000

Less: Taxes                                                                                          27,100

Net profits after taxes (earnings available for common                                                   \$
stockholders)                                                                                       42,900

Earnings per share (EPS)                                                                              \$2.15

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Description: Interpretation of Ratio Analysis of Firm's operation : Use the financial statements below and on page 84 for Fox Manufacturing Company for the year ended December 31, 2006, along with the industry average ratios also given in what follows, to
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