Case Studyabington-Hill Toys
Case Study: Abington-Hill Toys
Title: Abington-Hill Toys, Inc
Part I. Introduction Abington-Hill Toys, Inc has been assigned a new president Vernon Albright due to the death of Lewis Hill. The financial condition slowly deteriorated as Mr. Hill was running the company’s final years. Mr. Albright was brought in because the founders of the companies did not have a son or daughter that was willing to the take on the role of the new president. Mr. Albright took it upon him to take the leadership role and began to seek opinions from the outside of the firm to regain the financial stability that the company needed. David Hartly was brought on to be the assistant comptroller. He took his duties very serious and his first task was to undertake the complete analysis of the firm’s financial condition.
Part II. METHODOLOGY a. Current Ratio: Total Current Assets/ Total Current Liabilities b. Acid-test Ratio: (Current Assets - Inventory)/ Current Liabilities c. Average Collection Period: Accounts Receivable/ Annual Credit Sales x 365 days d. Inventory Turnover: Cost Of goods sold/ Inventory e. Fixed Asset Turnover: Sales/ Fixed Assets f. Total Asset Turnover: Sales/ Total Assets g. Debt Ratio: Total Debts/ Total Assets h. Times Interest Earned: Operating Profit/ Interest Expense i. Gross Profit Margin: Gross Profit/ Revenues j. Net Profit Margin: Net Income/ Revenues k. Return On Total Assets= EBIT/ Total Assets l. Return On Net Worth= Net Income/ Shareholders Equity m. Z-score= 1.2X1 + 1.4X2 + 3.3X3 + 0.6X4 + 1X5
X1= Working Capital/ Total Assets
X2= Retained Earnings/ Total Assets
X3= EBIT/ Total Assets
X4= Market Value of Common Equity/ Total Liabilities
X5= Sales/ Total Assets
Part III. SOLUTIONS a. Current Ratio: 280,000/ 290,000=0.98 b. Acid-test Ratio: (280,000-150,000)/290,000=.412 c. Average Collection Period: 120,000/(720,000/365)=59.8 days d. Inventory Turnover:
Title: Abington-Hill Toys, Inc
Part I. Introduction Abington-Hill Toys, Inc has been assigned a new president Vernon Albright due to the death of Lewis Hill. The financial condition slowly deteriorated as Mr. Hill was running the company’s final years. Mr. Albright was brought in because the founders of the companies did not have a son or daughter that was willing to the take on the role of the new president. Mr. Albright took it upon him to take the leadership role and began to seek opinions from the outside of the firm to regain the financial stability that the company needed. David Hartly was brought on to be the assistant comptroller. He took his duties very serious and his first task was to undertake the complete analysis of the firm’s financial condition.
Part II. METHODOLOGY a. Current Ratio: Total Current Assets/ Total Current Liabilities b. Acid-test Ratio: (Current Assets - Inventory)/ Current Liabilities c. Average Collection Period: Accounts Receivable/ Annual Credit Sales x 365 days d. Inventory Turnover: Cost Of goods sold/ Inventory e. Fixed Asset Turnover: Sales/ Fixed Assets f. Total Asset Turnover: Sales/ Total Assets g. Debt Ratio: Total Debts/ Total Assets h. Times Interest Earned: Operating Profit/ Interest Expense i. Gross Profit Margin: Gross Profit/ Revenues j. Net Profit Margin: Net Income/ Revenues k. Return On Total Assets= EBIT/ Total Assets l. Return On Net Worth= Net Income/ Shareholders Equity m. Z-score= 1.2X1 + 1.4X2 + 3.3X3 + 0.6X4 + 1X5
X1= Working Capital/ Total Assets
X2= Retained Earnings/ Total Assets
X3= EBIT/ Total Assets
X4= Market Value of Common Equity/ Total Liabilities
X5= Sales/ Total Assets
Part III. SOLUTIONS a. Current Ratio: 280,000/ 290,000=0.98 b. Acid-test Ratio: (280,000-150,000)/290,000=.412 c. Average Collection Period: 120,000/(720,000/365)=59.8 days d. Inventory Turnover: