In a Executive Summary evaluate the firm's strengths and weaknesses. Break your analysis down into evaluations of the firm's liquidity, asset management, debt, profitability, and market ratios, plus overall cross-ratio analysis. (one for each category tied to trends and comparison to industry, plus one for an overall synopsis.)

Part I. Financial Statement Analysis

Liquidity Ratios:

1. Current Ratio = Current Assets = $1,531,181 = 2.5

Current Liabilities $616,000

1. Quick ratio= Current assets - Inventories = $1,531,181- $700,625 = 1.3

Current Liabilities $616,000

Asset Management Ratios:

1. Inventory turnover (times)= COGS = $4,000,200 + 152,000 =5.9

Inventories $700,625

1. Days sales outstanding (DSO) = Receivables = Receivables =$805,556 =48.4

Average sales per day Annual sales/365 $6,075,000/365

Debt Management Ratios:

1. Debt-to-assets ratio= Debt ratio= Total debt =$311,000 + $1,565,200 =53.2%

Total Assets $3,525,000

1. Times interest earned ratio= EBIT = $896,800 =9.0

Interest Expense $99,500

Profitability Ratios:

1. Net profit margin= Net income available to

Common stockholders = $478,380 =7.9%

Sales $6,075,000

1. Return on common equity (ROE)= Net income available to

Common stockholders = $478,380 =35.6%

Common equity $1,343,800

Market Value Ratios:

1. Price/earnings (P/E) ratio= Price per share = $60 =12.6

Earnings per share $4.78

1. Market value/book (M/B) ratio= Market Cap = 60*100,000 =4.5

Total common equity $1,343,800

Historical & Industry Average Ratios
Ratio	Actual 2021	Actual 2022	Actual 2023	Industry Average 2023
a. Current ratio	1.7	1.8	2.5	1.5
b. Quick ratio	1	0.9	1.3	1.2
c. Inventory turnover (times)	5.2	5.0	5.9	10.2
d. Days sales outstanding (DSO)	60 days	46 days	48.4	46 days
e. Debt-to-assets ratio	45.8%	37.0%	53.2%	24.5%
f. Times interest earned ratio	10.2	10.9	9.0	12.5
g. Net profit margin	6.0%	7.2%	7.9%	1.2%
h. Return on common equity (ROE)	21.1%	32.9%	35.6%	17.9%
i. Price/earnings (P/E) ratio	9.8	10.2	12.6	10.1
j. Market value/book (M/B) ratio	3.2	3.36	4.5	3.5

Answer rating: 100% (QA)

Answer Executive Summary Financial Statement Analysis Strengths Liquidity The firms current ratio of 25 and quick ratio of 13 indicate strong liquidit... View the full answer