Question

1.What do the ratios calculated below communicate about the financial strengths and weaknesses of this company?

2.Based on your calculations, would you invest in this Company, why or why not

Hlstorical Ratios Projected Ratlo 12/31/17 0.96 0.60 1.20 12/31/18 1.01 0.69 1.19 3.81 16 8.50 3.70 1.10 12/31/19 1.06 0.75 1.21 3.94 17 9.90 3.60 1.34 15 Current Ratio Quick Ratio Debt-to-Total-Assets Ratio Current Ratio Quick Ratic Total Debt-to-Total-Assets Ratio Total Debt-to-Equity Ratio Times-Interest-Earned Ratio Inventory Turnover Fixed Assets Turnover Total Assets Turnover 15 10.00 3.50 1.36 1Ei 28.57 46% 3% 15% 98% Times-Interest-Earned Ratio Inventory Turnover Fixed Assets Turnover Total Assets Turnover Accounts Receivable Turnover Average Collection Period Gross Profit Margin % Operating Profit Margin % ROA % ROE % Average Collection Period 35.76 45% 13% 14% 89% 44% 15% 17% 114% ROA % ROE %

Answer 1

financial strengths and weaknesses of this company based on ratio calculated some are explain below.

Current Ratio

The current ratio is a reflection of financial strength. It is the number of times a company's current assets exceed its current liabilities, which is an indication of the solvency of that business.

Quick Ratio

The Quick Ratio is also called the "acid test" ratio. That's because the quick ratio looks only at a company's most liquid assets and compares them to current liabilities. The quick ratio tests whether a business can meet its obligations even if adverse conditions occur.

Inventory Turnover

It is also known as the cost-of-sales to inventory ratio. It is a good indication of purchasing and production efficiency.

Return on Assets

The return on assets ratio measures the relationship between profits your company generated and assets that were used to generate those profits. Return on assets is one of the most common ratios for business comparisons. It tells business owners whether they are earning a worthwhile return from the wealth tied up in their companies. In addition, a low ratio in comparison to other companies may indicate that your competitors have found ways to operate more efficiently.

Sales-to-Receivables Ratio

The sales-to-receivables ratio measures the number of times accounts receivables turned over during the period. The higher the turnover of receivables, the shorter the time between making sales and collecting cash. The ratio is based on NET sales and NET receivables.

i would invest in this because it's all ratio calculated are good and projected ratio also very in strong position.