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# Question 1

The table below shows an analysis of the Take-Two's 1998-2000 financial information:

Year
Item 1998 1999 2000

Age of Accounts (\$49,139 x 365) ÷ \$194,052 = (\$107,799 x 365) ÷ \$305,932 (\$134,877 x 365) ÷ \$387,006
Receivable 92.4 Days or 92 Days = 128.6 Days or 129 Days = 127.2 Days or 127 Days

(365 ÷ 7.43) = 49.1 Days or 49 (365 ÷ 7.40) = 49.3 Days or (365 ÷ 8.61) = 42.4 Days or
Age of Inventory
Days 49 Days 42 Days

Gross Profit (\$46,496 ÷ \$194,052) x 100 = (\$90,810÷ \$305,932) x 100 = (\$139,210 ÷ \$387,006) x 100
Percentage 23.96% 29.68% = 35.97%

Profit Margin (\$7,181 ÷ \$194,052) x 100 = (\$16,332 ÷ \$305,932) x 100 = (\$24,963 ÷ \$387,006) x 100 =
Percentage 3.7% 5.33% 6.45%

Return on Assets (\$7,181 ÷ \$109,385) = .065 (\$16,332 ÷ \$231,712) =.071 (\$24,963 ÷ \$351,641) =.071

Return on Equity (\$7,181 ÷ \$11,935) = .60 (\$16,332 ÷ \$11,935) = 1.37 (\$24,963 ÷ \$11,935) = 2.09

Current Ratio (\$95,302 ÷ \$73,505) = 1.29 (\$187,970 ÷ \$146,531) = 1.28 (\$214,908 ÷ \$152,023) = 1.41

Debt-to-Equity
(\$73,820 ÷ \$11,925) = 6.19 (\$146,609 ÷ \$11,925) = 12.29 (\$164,639 ÷ \$11,925) = 13.80
Ratio

Quality-of-
(\$8,022 ÷ \$7,181) = 1.11 (\$16,748 ÷ \$16,332) = 1.03 (\$55,259 ÷ \$24,963) = 2.21
Earnings ratio

There are three red flags in the financial statement of Take-Two’s. They include: