E xamine the following sets of ratios and identify the business problem the company is most likely
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Question:
Examine the following sets of ratios and identify the business problem the company is most likely experiencing
LIQUIDITY | T | T+1 | T+2 |
Current Ratio | 1.450 | 1.370 | 1.301 |
Quick Ratio | 0.580 | 0.552 | 0.527 |
Inventory:Working Capital | 1.266 | 1.458 | 1.707 |
Current Debt:Inventory | 1.755 | 1.852 | 1.945 |
PROFITABILITY | |||
Gross Profit:Net Sales | 47.00% | 47.00% | 47.00% |
Profit on Sales | 1.68% | 1.68% | 1.68% |
Net Profit:Total Assets | 1.37% | 1.36% | 1.35% |
Net Profit:Net Worth | 5.14% | 5.33% | 5.55% |
ACTIVITY | |||
Sales:Receivables | 9.865 | 9.548 | 9.252 |
Days Sales Outstanding | 37.000 | 38.226 | 39.453 |
Sales:Inventory | 5.000 | 4.897 | 4.798 |
Inventory Turnover | 2.650 | 2.595 | 2.543 |
Days Sales Inventory | 137.736 | 140.628 | 143.521 |
Sales:Net Worth | 3.058 | 3.175 | 3.302 |
Sales:Working Capital | 6.330 | 7.141 | 8.190 |
Fixed Assets:Net Worth | 1.400 | 1.459 | 1.523 |
Fixed Asset Turnover | 2.184 | 2.176 | 2.168 |
Total Asset Turnover | 0.815 | 0.808 | 0.801 |
Cash Velocity | 9.780 | 9.622 | 9.469 |
Average Payable Period | 41.000 | 42.157 | 43.314 |
CAPITAL STRUCTURE | |||
Total Debt:Net Worth | 2.750 | 2.928 | 3.121 |
Current Debt:Net Worth | 1.074 | 1.201 | 1.339 |
Long Term Debt:NetWorth | 1.676 | 1.727 | 1.782 |
Long Term Debt:Working Capital | 3.470 | 3.885 | 4.421 |
Long Term Debt:Fixed Assets | 1.197 | 1.184 | 1.171 |
Coverage of Fixed Charges | 8.400 | 8.400 | 8.400 |
a.Fixed assets financed by cash | ||
b.Stripping equity from the company using other current liabilities | ||
c.Inventory management problems | ||
d. | Declining revenues |
Related Book For
Fundamental Accounting Principles
ISBN: 978-0077862275
22nd edition
Authors: John Wild, Ken Shaw, Barbara Chiappetta
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