Dunham Cosmetics - Financial Evaluation

1.Calculate Dunham's 1995 financial rations. (See Exhibits 1,2, and 3). Current Ratio = (current assets/current liabilities) = (16,268/7,600) = 2.1405% Inventory Turnover = (sales/inventory) = (26,671/6,133) = 4.3487% receivable____ = 5,920___ = 81.01 Days DSO = annual sales/365 26,671/365 Fixed Asset Turnover = (sales/net fixed assets) = (26,671/3,336) = 7.9949% Total Turnover Asset = (sales/total assets) = (26,671/16,268) = 1.6394% Total Debt to Total Assets = (total debt/total assets) = (9,666/16,268) = 0.5941% Time Interest Earned = (earnings before interest taxes/interest charge) <Tab/><Tab/><Tab/> = (1,331/578) <Tab/><…

…time period for the note payable was given, we assume it was a loan, guaranteed with a note, extended for five years. B.Estimate the firm's 1996 minimum cash balance assuming that on average during 1993 to 1995 its cash situation was normal. Minimum cash balance = (1264 + 1237 + 879 / 3) = 1126 <Tab/> Extra cash available to amortize notes payable <Tab/> 2238 - 1126 = 1112 C.Use any excess cash at the end of 1996 to retire note payable. 3075 - 1111 = 1964