Question

Au bolcuole Normal No Spacing Heading 1 Yux Construction Company Financial Stat. Balance sheet 2018 2017 Formulae Current ratio Current assets/Current 585,632 878,000 $7,282 632,160 Liabilities Aucts Cash Account receivable (A/R) Inventories Total current Asset Gross Fixed Assets Less: Depreciation Net Fixed Assef Total Asset 1.716,480 2,680,112 1,197,160 380,120 817,040 3,497,152 1,287,360 1,926,802 1,202,950 263,160 939,790 2,866,592 Inv. turnover - Sales / Inventories FA turnover - Sales / Net fixed assets TA turnover = Sales / Total assets Debt ratio - Total debt / Total assets TIE -EBIT/Interest expense Profit margin-Net income / Sales Operating profit margin-EBIT/Sales ROA - Net income / Total assets ROE - Net income / Total common equity PE -Price/Earnings per share M/B - Mkt price per share / Book value per share DuPont Analysis ROE formula: ROE-(Profit margin) x (TA turnover) (Equity multiplier) ROE - (NI/Sales) x (SalesTA) (TAEquity) 436,800 300,000 408,000 1.144,800 Liabilities and Equity Accounts payable Notes payable Accruals Total Current Liability Long-term debt Common stock Retained Farnings Total Equity Total Liability and Equity 524,160 636,808 489,600 1,650,568 400.000 1,721,176 231,176 1.952 352 3,497,152 723.432 460,000 32.592 492.592 2.866,592 Income statement Other data $7,035,600 5,875,992 550.000 550.000 609.608 1169 2017 $6.034.000 5,528.000 519.988 (13,988 116.96 No. of shares Sales Cost of Goods Sold Other expenses EBITDA Depreciation and Amortizations Earnings before int. & tax (ERIT Interest expenses Earnings before 2018 250,000 $1,014 SO 220 $12.17 $40.000 2017 100.000 $1.602 $0.110 $2.25 492,648 (130,98) Stock Price Leases $40.000 20.00 422,640 136,012 266,960) Net income 169.05 253,584 (106,784 (160,176 States) Focus

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Answer 1

Answering Question 1)

Current ratio = Current Assets / Current Liabilities

	Current Ratio
	2018	2017
Current Assets	2,680,112	1,926,802
Current Liabilities	1,144,800	1,650,568
Current Ratio	2.34	1.17

Quick Ratio = (Current Assets - Inventories) / Current Liabilities

	Quick Ratio
	2018	2017
Current Assets	2,680,112	1,926,802
Current Liabilities	1,144,800	1,650,568
inventory	1,716,480	1,287,360
Quick ratio	0.84	0.39

Compared to the industry average, the liquidity position of the company is poorer according to both the ratios as both the numbers are smaller than the industry average.

A current ratio that is lower than the industry average may indicate a higher risk of distress or default.

Similarly, a company that has a quick ratio of less than 1 may not be able to fully pay off its current liabilities in the short term. The health of the company has improved as both ratios have improved from 2017 to 2018.

The Company should take the following action to improve its liquidity ratios:

a) Early Invoice Submission

b) Switch from Short-term debt to Long-term debt

c) Get Rid of Useless Assets

d) Control Your Overhead Expenses

e) Negotiate for Longer Payment Cycles