Question

Please very urgent

9252020 9/25/2020 Portfolio Content Edit BADM 3253 SLO 1.3 Instructions: Analyze the attached Balance Sheet and Income statement, calculating and interpreting the following ratios, and making a conclusion on the financial position of the company addressing the 3 financial categories. Profitability Ratios (in %): Return on equity, Return on assets, Return on invested capital, Profit margin, Gross margin Turnover-Control Ratios; Asset turnover, Fixed-asset turnover, Inventory turnover, Collection period (days), Days' sales in cash, Payables period Leverage and Liquidity Ratios: Assets to equity, Debt to assets, Debt to equity, Times interest earned, Current ratio, Acid test ratio. Instructions & Resources 1 Uploaded 2 years ago : 123 Uploaded 2 years ago : No content has been added to this page yet. Business Administration Assessment BADM 3253 SLO 11-13 X NOT SUBMITTED Modified: 2020-09-24 16:44:24

Answer 1

Profitability ratios	Jan-10	Jan-09
Return on equity	=net income/shareholders' equity
	=44674/902344	=58844/842148
	4.95%	6.99%
Return on assets	=net income/total assets
	=44674/1232106	=58844/1187730
	3.63%	4.95%
Return on invested capital	=net operating profit After tax/(long term debt+equity)
	=43552.68/(43491+902344)	=62604.13/(62916+842148
	4.60%	6.92%
NOPAT	=operating profit*(1-0.33)
	=65004*(1-0.33)	=93439*(1-0.33)
	43552.68	62604.13
Profit margin	=net income/sales
	=44674/1909575	=58844/1972418
	2.34%	2.98%
Gross margin	=gross income/sales
	=883816/1909575	=941177/1972418
	46.28%	47.72%

There is a decrease in the profitability of the company and return on invested capital and equity

Turnover-control ratios	Jan-10	Jan-09
Asset turnover	=Sales/Total assets
	=1909575/1232106	=1972418/1187730
	1.55	1.66
Fixed asset turnover	=sales/fixed assets
	=1909575/344746	=1972418/387472
	5.54	5.09
Inventory turnover	=sales/avergae inventory
	=sales/((opening+closing)/2)
	=1909575/((431492+440099)/2)	=1972418/((492423+440099)/2)
	4.38	4.23
Collection period days	=365/Debtors turnover ratio
	=avergae debtors/sales*365
	=((opening+closing)/2)/sales*365
	=((40662+16745)/2)/1909575*365	=((24872+40662)/2)/1972418*365
	5.49	6.06
Payables period	=365/creditors ratio
	=average creditors/purchases*365
	=((opening+closing)/2)/purchases*365
	=((108800+83052)/2)/1017152*365	=((108800+146713)/2)/978917*365
	34.42	47.64
Purchases	=COGS+closing inventory-opening inventory
	=1025759+431492-440099	=1031241+440099-492423
	1017152	978917

Due to decreasing trend in turnover from past 2 years the turnover-control ratios are also affected for the company

Leverage ratios	Jan-10	Jan-09
Asset to equity	=asset/equity
	=1232106/902344	=1187730/842148
	1.37	1.41
Debt to assets	=total debts/total assets
	=329762/1232106	=345582/1187730
	0.27	0.29
Debt to equity	=total debt/total equity
	=329762/902344	=345582/842148
	0.37	0.41
Times interest earned	=EBIT/total interest expense
	=151094/332	=184104/4300
	455.10	42.81
Current ratio	=current assets/current liabilities
	=708330/224035	=631615/220223
	3.16	2.87
Acid test ratio	=(current assets-inventories)/current liabilities
	=(708330-431492)/224035	=(631615-440099)/220223
	1.24	0.87

The balance liquity and solvancy ratios indicate long term and short term liquidity and solvency of the company