Homework Answers
| 1 | Liquidity Ratio:- | |||||
| . | ||||||
| Current Ratio :- Current Asset/ Current liability | ||||||
| Particular | 2017 | 2018 | 2019 | |||
| Total Current Assets | 19,939 | 19,880 | 20,151 | |||
| Total Current Liability | 17,791 | 18,526 | 14,859 | |||
| Current Ratio | 1.12 | 1.07 | 1.36 | |||
| The ideal current ratio of the company is 1.2 to 2. In the year 2017 the company is maintaining the ratio of 1.12. In year 2018, the current liabilities has been increasing and the current ratio drops down to 1.07. This indicates bad performance of the company and may company face liquidy constraints. In year 2019, company understand and improving its current assets and reduces lialibity and achieve ideal current ratio | ||||||
| 2 | Inventory Ratio:- | |||||
| Inventory Ratio :- COGS/ Average inventory | ||||||
| Particular | 2017 | 2018 | 2019 | |||
| A | Opening Inventory | - | 2,829 | 3,035 | ||
| B | Closing Inventory | 2,829 | 3,035 | 3,749 | ||
| COGS | 47,904 | 49,462 | 50,144 | |||
| Average Inventory (A+B)/2 | 2,829 | 2,932 | 3,392 | |||
| Inventory Turnover ratio | 16.93 | 16.87 | 14.78 | |||
| The ideal current ratio of the company is 5 to 10. In the year 2017 the company is maintaining the ratio of 16.93. In year 2018, the Inventory ratio drops down to 16.87.The change is very minor and company needs to improve it a lot. This indicates bad performance of the company and may Inventory shortages at high demands. In year 2019, company understand and improving its ratio and reduces the inventory turnover ratio upto 14.78. | ||||||
| 3 | Debt Ratio:- | |||||
| Debt ratio :- Total Debt/ Total Equity | ||||||
| Particular | 2017 | 2018 | 2019 | |||
| A | Total Debt | 21,307 | 23,826 | 22,229 | ||
| B | Total Assets | 25,635 | 27,561 | 26,500 | ||
| Debt Ratio | 0.83 | 0.86 | 0.84 | |||
| The ideal current ratio of the company is 0.3 to 0.6. In the year 2017 the company is maintaining the Debt ratio of 0.83, which is higher than ideal ratio. In year 2018, the Debt ratio increases to 0.86.The change is very minor and company needs to improve it a lot. This indicates bad performance of the company and may lead to higher debt ratio in high and company assets fall short as compared to liabilities. In year 2019, company understand and improving its ratio and reduces the Debt ratio upto 0.84. | ||||||
| 4 | Profitability Ratio:- | |||||
| Gross profit ratio :- Gross profit/ Total Sales*100 | ||||||
| Particular | 2017 | 2018 | 2019 | |||
| A | Gross profit | 9,516 | 11,671 | 10,957 | ||
| B | Total Sales | 57,420 | 61,133 | 61,101 | ||
| Gross profit ratio | 16.57 | 19.09 | 17.93 | |||
|
In the year 2017 the company is
maintaining the GP ratio of 16.57%. In year 2018, the GP Ratio
increases to 19.09.It shows the positive sign and company managed
to increase its revenue for the year. In year 2019, company revenue
drops and its GP ratio falls upto 17.93. The revenue of the company
is less as compared
Know the answer?
Add Answer to:
|
133 CHAPTER 3 Financial Statements and Ratio Analysis Common-size statement analysis A common-size income statement for Creek Enterprises' 2018 operations follows. Using the firm's 2019 income statem presented in Problem 3-16, develop the 2019 common-size income statement an compare it with the 2018 statement. Which areas require further analysis and investigation? P3-19 Creek Enterprises Common-Size Income Statement for the Year Ended December 31, 2018 Sales revenue ($35,000,000) Less: Cost of goods sold 100.0% 65.9 34.1% Gross profits Less: Operating expenses...
133 CHAPTER 3 Financial Statements and Ratio Analysis Common-size statement analysis A common-size income statement for Enterprises' 2018 operations follows. Using the firm's 2019 income stater Creek ment P3-19 em 3-16, develop the 2019 common-size income statement and compare it with the 2018 statement. Which areas require further analysis and investigation? Creek Enterprises Common-Size Income Statement for the Year Ended December 31, 2018 100.0% 65.9 34.1 % Sales revenue ($35,000,000) Less: Cost of goods sold Gross profits Less: Operating expenses...
Complete Assurance of Learning Exercise 4C: Financial Ratio
Analysis for PepsiCo.
Financial Ratios for PepsiCo (2012) use the below information to
find
Liquidity Ratios:
- Current ratio:
- Quick ratio:
Leverage Ratios:
- Debt-to-total-assets ratio:
- Debt-to-equity ratio:
- Long-term debt-to-equity ratio:
- Times-earned-interest ratio: Profits before interest and
taxes/Total interest charges
Activity Ratios:
- Inventory turnover:
- Fixed assets turnover:
- Total assets turnover:
- Accounts receivable turnover:
Profitability Ratios:
- Gross profit margin:
- Operating profit margin:
-...
A main element of financial statement analysis is the use of common-size financial statements, also called "vertical analysis." A common-size balance sheet divides each account's value by the value of total assets, while a common-size income statement divides each entry by net sales revenue Common-size balance sheets immediately show how a firm's assets, liabilities, and equity are distributed. Common-size income statements give a quick snapshot of how various expenses and types of income relate to sales revenue. The following common-size...
Red Queen Restaurants wishes to prepare financial plans. Use
the financial statements and the other information provided here to
prepare the financial plans. The following financial data are also
available:
(1) The firm has estimated that its sales for 2020 will be
$900,600.
(2) The firm expects to pay $35,600 in cash dividends in
2020.
(3) The firm wishes to maintain a minimum cash balance of
$30,000.
(4) Accounts receivable represent approximately 21% of annual
sales.
(5) The firm's ending...
(Analyzing common-size financial statements) Use the common-size financial statements found here: to respond to your boss' request that you write up your assessment of the firm's financial condition. Specifically, write up a brief narrative that responds to the following questions: a. How much cash does Patterson have on hand relative to its total assets? b. What proportion of Patterson's assets has the firm financed using short-term debt? Long-term debt? c. What percent of Patterson's revenues does the firm have left...