A few years ago, I decided to expand my coffee shop business and bought a coffee roaster. I created my own brand, America's famous, and started selling vacuum-packed coffee in local supermarkets. It was a huge success! Sales of my vacuum-packed coffee skyrocket and soon become the item most sold in my company. To be honest, I have concentrated on sales and no other items in the income statement or balance sheet. A finance intern from Kean University prepared the Table below. I am a little embarrassed to confess that I don't know what most of the ratios mean. However, I noticed that some of the ratios are below the industry median, and I am anxious. Should I be worried? Is my business on the edge of being broke? What can you say about the financial performance of The America's famous Co? Do you have any suggestions? Current ratio Quick ratio Cash ratio Total asset turnover Inventory turnover Receivables turnover Total debt ratio Debt-equity ratio Equity multiplier Times interest earned Cash coverage ratio Profit margin Return on assets Return on equity The America's famous Co. 0.74 0.39 0.15 2.01 27.96 54.91 0.43 0.74 1.74 5.26 8.12 5.01% 10.08% 17.59% Industry Median 1.43 0.35 0.21 0.85 6.15 9.82 0.52 1.08 2.08 8.06 9.41 5.10% 9.53% 15.14%
A few years ago, I decided to expand my coffee shop business and bought a coffee roaster. I created my own brand, America's famous, and started selling vacuum-packed coffee in local supermarkets. It was a huge success! Sales of my vacuum-packed coffee skyrocket and soon become the item most sold in my company. To be honest, I have concentrated on sales and no other items in the income statement or balance sheet. A finance intern from Kean University prepared the Table below. I am a little embarrassed to confess that I don't know what most of the ratios mean. However, I noticed that some of the ratios are below the industry median, and I am anxious. Should I be worried? Is my business on the edge of being broke? What can you say about the financial performance of The America's famous Co? Do you have any suggestions? Current ratio Quick ratio Cash ratio Total asset turnover Inventory turnover Receivables turnover Total debt ratio Debt-equity ratio Equity multiplier Times interest earned Cash coverage ratio Profit margin Return on assets Return on equity The America's famous Co. 0.74 0.39 0.15 2.01 27.96 54.91 0.43 0.74 1.74 5.26 8.12 5.01% 10.08% 17.59% Industry Median 1.43 0.35 0.21 0.85 6.15 9.82 0.52 1.08 2.08 8.06 9.41 5.10% 9.53% 15.14%
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:A few years ago, I decided to expand my coffee shop business and bought a coffee roaster. I created my own brand, America's famous, and
started selling vacuum-packed coffee in local supermarkets. It was a huge success! Sales of my vacuum-packed coffee skyrocket and soon
become the item most sold in my company. To be honest, I have concentrated on sales and no other items in the income statement or balance
sheet. A finance intern from Kean University prepared the Table below. I am a little embarrassed to confess that I don't know what most of the
ratios mean. However, I noticed that some of the ratios are below the industry median, and I am anxious. Should I be worried? Is my business
on the edge of being broke? What can you say about the financial performance of The America's famous Co? Do you have any suggestions?
Current ratio
Quick ratio
Cash ratio
Total asset turnover
Inventory turnover
Receivables turnover
Total debt ratio
Debt-equity ratio
Equity multiplier
Times interest earned
Cash coverage ratio
Profit margin
Return on assets
Return on equity
The America's famous Co.
0.74
0.39
0.15
2.01
27.96
54.91
0.43
0.74
1.74
5.26
8.12
5.01%
10.08%
17.59%
Industry Median
1.43
0.35
0.21
0.85
6.15
9.82
0.52
1.08
2.08
8.06
9.41
5.10%
9.53%
15.14%
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