Ratio Analysis (of each Ratio group), commenting on ratios to provide managements with some suggestions on how
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- Ratio Analysis (of each Ratio group), commenting on ratios to provide managements with some suggestions on how the company could improve and the benefit of improving the ratios. Keeping in mind that some improvement suggestions to other ratios could result in worsening of other ratios.
- Note: For each of the ratios your commentary should include
- A Summary grouping the ratios into 5 categories: Liquidity, Activity, Profitability, Leverage and Market Performance.
- A clear explanation of the purpose of each formula and include the workings.
- State what each ratio is used for and what the results show about the performance of the business compared to previous year and industry averages
- Compare ability to collect accounts receivable at the beginning of 2022 and at the end of 2022
- Showing any existing or problem areas
- Recommendations to improve problem areas
2022 | 2021 | Industry standards/benchmarks | |
LIQUIDITY RATIO | |||
Current Ratio | 1.85:1 | 1.87:1 | 1.38:1 |
Liquid Ratio | 1.43:1 | 1.18:1 | 1.18:1 |
ACTIVITY RATIOS | |||
Day's sales in Receivables | 48 | 39 | 39 days |
Inventory Turnover | 4.61 | 4.65 | 6.28 times |
Accounts receivable Turnover | 7.60 | 9.36 | 7-10 days |
LEVERAGE RATIOS | |||
Debt to Equity ratio | 42.06% | 34.94% | 75% |
Times Interest Covered | 4.38 | 4.07 | 3.74 times |
PROFITABILITY RATIOS | |||
Profit margin | 5.55% | 3.23% | 22% |
Earnings per Share | $ 0.52 | $ 0.28 | $0.35 per share |
Return on Equity | 15.00% | 9.29% | 9.08% |
MARKET PERFORMANCE RATIOS | |||
P/E ratio | 9.69:1 | 12.52:1 | 18.86 times |
Dividend yield | 2.40% | 2.86% | 10% |
Related Book For
Fundamentals of Financial Management
ISBN: 978-1337395250
15th edition
Authors: Eugene F. Brigham, Joel F. Houston
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