Finance

a. Assess Corrigan's liquidity position and determine how it compares with peers and how the liquidity |

position has changed over time. | | | | |

Corrigan's liquidity position has improved from 2010 to 2011; however, its current ratio is still |

below the industry average of 2.7. | | | | |

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b. Assess Corrigan's asset management position and determine how it compares with peers and |

how its asset management efficiency has changed over time. | | |

Corrigan's inventory turnover, fixed assets turnover, and total assets turnover have improved from |

2010 to 2011; however, they are still below industry averages. The firm's days sales outstanding ratio |

has increased from 2010 to 2011--which is bad. In 2010, its DSO was close to the industry average. |

In 2011, its DSO is somewhat higher. If the firm's credit policy has not changed, it needs to |

look at its receivables and determine whether it has any uncollectibles. If it does have uncollectible |

receivables, this will make its current ratio look worse than what was calculated above. | |

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c. Assess Corrigan's debt management position and determine how it compares with peers and how its |

debt management has changed over time. | | | | |

Corrigan's debt ratio has increased from 2010 to 2011, which is bad. In 2010, its debt ratio was right |

at the industry average, but in 2011 it is higher than the industry average. Given its weak current and |

asset management ratios, the firm should strengthen its balance sheet by paying down liabilities. |

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f. Calculate Corrigan's ROE as well as the industry average ROE using the DuPont equation. |

From this analysis, how does Corrigan's financial position compare with the industry | |

average numbers? | | | | | |

| ROE = | PM x | TA Turnover x Equity Multiplier | |

2011 | 2.22% | 0.43% | 2.31 |...