The market value of Tuck Corporation at December 31, 2013 was $3,000,000.
This assignment is based on the financial statements and notes for Tuck Corporation as shown in the following pages and additional information as follows:
- Tuck’s competitors use FIFO for inventory costing.
- The market value of Tuck Corporation at December 31, 2013 was $3,000,000.
- The investments in nonconsolidated affiliates were made for speculative reasons.
- Rental revenues were derived from a short-term lease of an unused portion of the Building.
Using the financial statements and notes and the additional information above, provide the following as a basis for a future comparison of Tuck Corporation to competitor ratios and industry benchmarks:
- A decomposition of ROE using a 5-way DuPont Analysis showing all the components (e.g., interest burden, tax burden, etc) (10 points)
- A decomposition of ROE into operating return and nonoperating return and the components comprising each (e.g., NOPM, NOAT, FLEV etc.) (10 points)
- The probability of bankruptcy of the corporation as of December 31st, 2013 using the Altman Model showing all components and the Z-score using the NORMDIST function. (5 points)
- The range of debt ratings for Tuck Corporation using as many of the ratios and definitions as warranted from Exhibit 7-6 in the text. (5 points)
- A summary of specific results from your analysis that you would be especially interested in comparing Tuck Corporation to its competitors in a future analysis. (5 points)
Be sure to show your work in good (i.e., legible) form and be sure to document the basis for your approach where judgement is necessary in doing your analysis. Also, be sure your summary is supported by your analysis.