Financial trend Analysis: Directly analyze the firm’s financial statements as pr
ID: 2731301 • Letter: F
Question
Financial trend Analysis: Directly analyze the firm’s financial statements as presented in the Exhibits.
Calculate liquidity ratios of the firm for the prior year and current year: current ratio, inventory turnover, and the accounts receivable turnover (for denominator of turnover ratios, use the year presented). Show your calculations and interpret the trend. What conclusions do you draw from this analysis?
Calculate the following solvency ratios of the firm for the prior year and current year: debt to equity and times interest earned. Show your calculations and interpret the trend. What conclusions do you draw from this analysis?
Calculate the following profitability ratios of the firm for the prior year and current year: gross margin, net profit margin, return on assets, and return on equity (for the denominator of the return ratios, use the year presented). Show your calculations and interpret the trend. What conclusions do you draw from this analysis?
RATIOS 2015 2014 Liquidity Ratio: Current Ratio = Current Assets/Current Liability 1.12983425 1.294642857 Inventory Turnover= Cost of Goods Sold/Turnover -29.9008264 -57.61538462 Accounts Receivable Turnover= Net Credit Sales/Accounts Receivable 207.446809 206.5217391 Solvency Ratio: Debt to Equity= Debt/Equity 0.6499113 1.579778831 Times Interest Earned= EBIT/Interest -9.16666667 -7.083333333 Probability Ratio: Gross Margin= Gross Profit/Total Sales 0.20071795 0.156842105 Net Profit Margin= Net Profit/Total Sales 0.05384615 0.013684211 Return on Assets= Net Profit/Total Assets 0.16656091 0.037249284 Return on Equity= Net Profit/Total Equity 0.31046718 0.102685624Explanation / Answer
Analysis has been provided under the calculations:
Analysis: Current Ratio is one of the best, but perfect is around 2. Accounts Receivable Turnover has been very good and it shows company do not have much fund involved in Accounts Receivables. Inventory is unknown.
Analysis: Debt-Equity shows that debt has been reduced against the equity over the year. Interest factor is been reduced significantly due to reduction in the company's debt.
Return on Equity= Net Profit/Total Equity
Analysis: Gross margin and Net Profit margin have been trimendously improved over the year. The same ijmprovement is depicted in the Return on Assets & Equity ratios.
RATIOS 2015 2014 Liquidity Ratio: Current Ratio = Current Assets/Current Liability 1.12983425 1.294642857 Inventory Turnover= Cost of Goods Sold/Turnover -29.9008264 -57.61538462 Accounts Receivable Turnover= Net Credit Sales/Accounts Receivable 207.446809 206.5217391Analysis: Current Ratio is one of the best, but perfect is around 2. Accounts Receivable Turnover has been very good and it shows company do not have much fund involved in Accounts Receivables. Inventory is unknown.
Solvency Ratio: Debt to Equity= Debt/Equity 0.6499113 1.579778831 Times Interest Earned= EBIT/Interest -9.16666667 -7.083333333Analysis: Debt-Equity shows that debt has been reduced against the equity over the year. Interest factor is been reduced significantly due to reduction in the company's debt.
Probability Ratio: Gross Margin= Gross Profit/Total Sales 0.20071795 0.156842105 Net Profit Margin= Net Profit/Total Sales 0.05384615 0.013684211 Return on Assets= Net Profit/Total Assets 0.16656091 0.037249284Return on Equity= Net Profit/Total Equity
Analysis: Gross margin and Net Profit margin have been trimendously improved over the year. The same ijmprovement is depicted in the Return on Assets & Equity ratios.
0.31046718 0.102685624Related Questions
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