Quantum Moving Company has the following data. Industry information also is show

Question

Quantum Moving Company has the following data. Industry information also is shown Company data Year Net Income Total Assets 20X1 $ 424,000 2,843,000 20X2 20X3 Industry Data on Net Income/Total Assets 14.0% 9.8 3.9 428,000 412,000 3,267,000 3,834,000 Industry Data on Debt Total Assets Year 20X1 $1,722,000 $ 2,843,000 20X2 20X3 Debt Total Assets 1,732,000 1,950,000 3,267,000 3,834,000 56.6% 42.0 38.0 a. Calculate the company's data in terms of: (Input your answers as a percent rounded to 1 decimal place.) 20X1 20X2 20X3 Net income/Total assets Debt/Total assets b. As an industry analyst comparing the firm to the industry, are you likely to praise or criticize the firm in terms of Praise/Criticize Net income/Total assets Debt/Total assets

Explanation / Answer

A. Net income/ Total Assets:

20X1 = 424000/2843000 =14.9%

20X2= 428000/3267000 = 13.1%

20X3= 412000/3834000= 10.7%

Debt/Total Assets

20X1= 1722000/2843000= 60.6%

20X2 = 1732000/3267000= 53%

20X3 = 1950000/3834000 = 50.9%

B. Net Income / Total Assets = Praise ( since it is greater than the industry average)

Debt/Total Assets= Critical (ideally debt is should be lesser than compared to the proportion of assets, higher debt ratio shows burden on company to pay off debts)

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