Homework Answers
|
2016 |
2017 | 2,018 | 2019 | ||
| ROE |
6.60 |
8.10 | 9.80 | 10.50 | |
| ROA |
6.80 |
7.80 | 9.40 | 9.50 | |
| From the analysis of ROE and ROA ratio of the company it can be said that profitability of the company has increased over the period of 4 years so it is a good investment proposal. | |||||
| Assets Turnover |
0.25 |
0.3 | 0.54 | 0.68 | |
| Days Inventory |
389 |
381 | 234 | 228 | |
| Days sales |
69 |
96 | 102 | 117 | |
| Days Purchase |
167 |
178 | 150 | 125 | |
| From the analysis of the efficiency ratios it can be seen that Asset turnover ratio has increased and days inventory has reduced over the period which shows a positive impact on the efficiency utilization of the company. Days sales has increased shows a sign of increased sales and say purchase has reduced | |||||
| Current ratio |
199 |
193 | 201 | 223 | |
| quick Ratio |
51 |
66 | 93 | 102 | |
| from the analysis of current and quick ratio it is found that both the liqudity ratio show an increasing trend over the years which signifies that short term liquidity position of the company is improving. | |||||
| Debt ratio |
37 |
41 | 48 | 59 | |
| Interest coverage ratio |
13.2 |
9.2 | 5.4 | 3.5 | |
| debt ratio is increasing it means company is using more debt in its capital structure while interest coverage ratio is decreasing due to use of more debt In the company capital structure | |||||
| Overall we can say that it is a good investment as profitability, efficiency utilization, short liquidity are good for the company |
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company and what the causes may be
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numbers are not presented, do not use averages when calculating the
ratios for 2018. Instead, use the number presented on the 2018
balance sheet.
2019 2018 $420,000 16,000 436,000 $350,000 10,000 360,000 252,000 42,000 22,000 6,000 42,000 364,000 $ 72,000 206,000 38,000 20,000 6,000 36,000 306,000 $ 54,000 Revenues Net sales Other revenues Total revenues Expenses Cost of goods sold Selling expenses...
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