You will find selected ratios for a company over a two-year period. Compare the ratios, and in a separate document (Word or Excel), submit your answers to the following questions:

1. What does the calculation of each ratio represent?
2. How does year one compare with year two, and what trend can be seen when you compare the two years?
3. Is the trend from year one to year two positive or negative?
4. What are the possible reasons for the trend?
5. What recommendations do you have for turning a negative trend to a positive trend?

Ratio Year 1 Year 2 Current ratio 3.12:1 2.96:1 Quick ratio 1.34:1 1.02:1 Receivables turnover 9.7 times 10.2 times Inventory turnover Profit margin 2.4 times 2.3 times 11.4% 12.6% Asset turnover 1.21 times 1.22 times Return on assets 13.7% 15.4% Return on equity 28.5% 29.3% Price-earnings ratio 10.4 times 12.4 times Debt ratio 50.2% 45.3% Times interest earned 9.6 times 13.0 times