In analysing the financial statements of an entity, the following ratios were calculated: 2011 2012 Current ratio 2:1 1.3:1 Quick ratio 1:1 0.7:1 Receivables turnover (days) 30 45 Inventory turnover 3 times 4 times Profit margin 10% 7% Discuss any potential weaknesses that these ratios may reveal in the overall performance of the entity, and comment on possible causes for these results.

In analysing the financial statements of an entity, the following ratios were calculated: 2011 2012 Current ratio 2:1 1.3:1 Quick ratio 1:1 0.7:1 Receivables turnover (days) 30 45 Inventory turnover 3 times 4 times Profit margin 10% 7% Discuss any potential weaknesses that these ratios may reveal in the overall performance of the entity, and comment on possible causes for these results.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Using the fiscal year end 2019 annual report for General Mills, Inc. and the figures from the 2017 annual report as noted below, calculate the financial ratios for 2019 and 2018 indicated using the EXCEL template provided: Gross profit percentage Return on sales Asset turnover Return on assets Return on common stockholders’ equity Current ratio Quick ratio Operating-cash-flow-to-current-liabilities ratio Accounts receivable turnover Average collection period Inventory turnover Days’ sales in inventory Debt-to-equity ratio Times-interest-earned ratio Operating-cash-flow-to-capital-expenditures ratio Earnings per share Price-earnings ratio Dividend yield Dividend payout ratio Total assets 2017 = $21,812.6 Total stockholders’ equity 2017 = $4,327.9 Total current liabilities 2017 = $5,330.8 Accounts receivable 2017 = $1,430.1 Inventory 2017 = $1,483.6 Year-end closing stock price May 2019 = $50.93 Year-end closing stock price May 2018 = $39.37 Perform a comparative analysis of the…
Calculate the Rate of Return on Assets (ROA) for 2011. Disaggregate ROA into the profit margin for ROA and total assets turnover components. Calculate the Rate of Return on Common Stockholders’ Equity (ROCE) for 2011. Disaggregate ROCE into the profit margin for ROCE, total assets turnover and capital structure leverage components.
Based on this analysis how would I assess the financial stability and operational efficiency of this company? Ratio and Ratio Formula (in thousands) 2015 2014 2013 Current Industry Average Liquidity Current Ratio =Current Asset / Current Liability 9,900/6,300 1.57 1.61 1.62 1.63 Acid Test Ratio or Quick Ratio = (Cash + Marketable securities + Accounts receivable)/Current liabilities (400+300+3,200)/6,300 0.62 0.64 0.63 0.68 Solvency Times Interest Earned =Earnings before interest & taxes/interest expense, gross (7,060+900)/900 8.84 8.55 8.5 8.45 Profitability Profit margin on sales = net income/sales 7,060/30,500 14% 13.20% 12.10% 13.00% Productivity Asset turnover = sales/avg total assets 30,500/6,000+5,400)/2) 1.85 1.84 1.83 1.84 Inventory turnover = COGS/avg inv 17,600/ (6,000+5,400)/2) 3.09 3.17 3.21 3.18
Compute the following ratios for 2025 and 2024. a. Currentratio b. Inventory turnover. (Inventory on December 31,2023 , was$400.) c. Profit margin. d. Return on assets. (Assets on December 31, 2023, were$2,300.) e. Return on common stockholders' equity. (Stockholders' equity-common on December 31,2023, was$950.) f. Debt to assets ratio. g. Times interest earned.
You are provided with the Income Statement and the Balance Sheet of HTS software, Inc. for 2011.Required: (a) Calculate the ratios stated in the table below for HTS Software, Inc. for 2011 (b) Analyze the current financial position for the company from a time series and cross section viewpoint. (c) Break your analysis into an evaluation of the firm’s liquidity, activity, debt, profitability and market ratios.