Assignment:
A recent annual report issued by Circuit City revealed the following data:
|
|
End of |
Beginning of the |
|
|
|
Year |
Year |
|
| Current Assets |
2.85 Billion |
2.94 Billion |
|
| Current Liabilities |
1.29 Billion |
1.41 Billion |
|
| Stockholders equity |
2.36 billion |
2.14 Billion |
|
The Company's income statement reported total annual revenue of $12.96 billion, and net income for the year of $161 million.
a. Evaluate Circuit City's profitability by computing its net income percentage and it return on equity for the year.
b. Evaluate Circuit City's liquidity by computing its working capital and its current ratio at the beginning of the year and at the end of the year.
c. Does Circuit City appear to be both profitable and liquid? Explain.