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Question

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Explanation / Answer

Ratio analysis:

Inventory Turnover: Cost of Goods Sold / Average Inventory

2023: Average inventory = ($25200000 + $35480000) / 2 = $30340000

COGS = $84972000

IT = $84972000 / $30340000 = 2.80

2024: Average inventory = ($58463000 + $35480000) / 2 = $46971500

COGS = $89752000

IT = $89752000 / $46971500 = 1.91

Receivables Turnover: Credit Sales / Average Gross Accounts Receivable

2023: Average Gross A/R = ($15600000 + $19650000) / 2 = $17625000

Credit sales = $151765000

RT = $151765000 / $17625000 = 8.61

2024: Average Gross A/R = ($19650000 + $26189000) / 2 = $22919500

Credit sales = $181546000

RT = $181546000 / $22919500 = 7.92

Total Asset Turnover: Sales / Average Total Assets

2023: Average total assets = ($596407000 + $583348000) / 2 = $589877500

TAT: $151765000 / $589877500 = 0.26

2024: Average total assets = ($583348000 + $588115000) / 2 = $585731500

TAT: $181546000 / $585731500 = 0.31

Working Capital Turnover: Sales / Working Capital

Working Capital = Current Assets - Current Liabilities

2023: WC = $73564000 - $139378000 = ($65814000)

WCT = $151765000 / ($65814000) = (2.31)

2024: WC = $92715000 - $121068000 = ($28353000)

WCT = $181546000 / ($28353000) = (6.40)

Current Ratio: Current Assets / Current Liabilities

2023: $73564000 / $139378000 = 0.53

2024: $92715000 / $121068000 = 0.77

Quick Ratio: Quick assets / Current Liabilities

2023: Quick assets = $73564000 – ($35480000 + $1250000) = $36834000

QR = $36834000 / $139378000 = 0.26

2024: Quick assets = $92715000 – ($58463000 + $750000) = $33502000

QR = $33502000 / $121068000 = 0.28

Cash Ratio: Cash + Marketable securities / Current liabilities

2023: ($12684000 + $4500000) / $139378000 = 0.12

2024: ($5813000 + $1500000) / $121068000 = 0.06

Debt to Assets ratio: Total Debt / Total Assets

2023: $299801000 / $583348000 = 0.51

2024: $303775000 / $588115000 = 0.52

Gross profit margin: GP / Sales

2023: $66793000 / $151765000 = 44%

2024: $91794000 / $181546000 = 51%

Net profit margin: NP / Sales

2023: -$20483000 / $151765000 = -13.5%

2024: $41043000 / $181546000 = 22.60%

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