These are financial ratios of blockbuster for the year 2006 and 2010. Based on each of these these ratios, compare and comment the financial situation of the company.

Computation of Financial ratios:

The ratios for the years 2006 and 2010 can be computed as follows,

Net profit margin

Net profit margin= Net Profit Total Revenue

For 2006: $50,500 $5,522,200 = 0.91%

For 2010: -$268,000$3,240,700 = -8.26%(Negative)

Current ratio Current ratio= Current Assets Current Liabilities

For 2006: $1,562,400 $1,405,400 = 1.11 times

For 2010: $852,100$562,300 = 1.52 times

Return on capital ratio Return on capital ratio= Net operating profit (Total Assets - Current Liabilities)

For 2006: $78,700 ($3,134,600 -$1,405,400)

= $78,700 $1,729,200

= 0.0455 or 4.55%

For 2010: -$106,000($1,183,500 -$562,300)

= $106,000 $621,200

= -0.1706 or -17.06%(Negative)

Debt-equity ratio:

Debt-equity ratio = Total Liabilities Total Equity

For 2006: $2,411,300 $723,300= 3.33

For 2010: $1,735,500 (-$552,000)= 3.14(Negative)

Answer rating: 100% (QA)

Answer Blockbusters Financial Decline A Ratio Analysis 2006 vs 2010 The financial ratios for Blockbu... View the full answer