Using 2013 & 2014 Balance sheet & Income statement for two companies, financial ratios for two companies:

1)Current ratio Current ratio:

= Current assets Current liabilities

PWS 2014:

= $295,640$330,434 = 0.89

PWS 2013: = $301,660$301,958 = 1

CWS 2014:

= $70,805$89,746 = 0.79

CWS 2013:

= $64,545$88,098 = 0.73

2)Quick ratio Quick ratio:

= Quick assets Current liabilities

PWS 2014:

= ($295,640-$35,589) $330,434 = 0.79

PWS 2013:

= ($301,660-$37,035) $301,958 = 0.88

CWS 2014:

= ($70,805-$3,905-$8,790) $89,746 = 0.65

CWS 2013:

= ($64,545-$3,494-$6,673) $88,098 = 0.62

3)Debt-to-equity ratio 4)Times interest earned ratio (Interest coverage ratio) 5)Inventory Turnover 6)Receivable turnover 7)Total asset turnover 8)Profit margin

Ratio	PWS	PWS	CWS	CWS
	2014	2013	2014	2013
Debt to Equity Ratio =Total liabilities/Total stock holder fund	1.75	1.63	-78.30	57.76
Time Interest Earned Ratio = EBIT/Interest Expenses	3.79	4.05	0.33	0*
Inventory Turnover Ratio =Cost of goods sold/Average Inventory	0**	0**	95.84	92.32
Receivable Turnover Ratio = Net Credit sales/Average receivables	8.92	8.54	9.21	8.67
Total Asset Ratio = Net Sales/Average Asset	0.59	0.59	0.76	0.69
Profit Margin = Net income/Net Sales	6.30%	5.82%	-4.64%	-11.89

Notes About Above Answers

- * In 2013 CWS income statement show EBIT is negative. IF there is no income, NO Time interest earned ratio. Hence Time interest earned ration is 0. - ** PWS have no cost of goods sold & inventory - Average inventory = (closing inventory+ opening inventory)/2 2014 2013 Average inventory of CWS (3905+3484)/2 =3699.50 ( 3494+3503/2) = 3498.50

Average Receivables = (Closing Receivable+ opening receivables)/2 2014 2013 Average receivables of PWS (217894+232147)/2 = 225020.50 (23214+242326)/2=237236.50

Average receivables of CWS (55570+52547)/2 = 54058.50 (52547+52465)/2=52506

Average Total Assets = (Closing Asset +Opening Asset)/2 2014 2013

Average receivables of PWS (3376436+3392570)/2 = 3384503 (3392570+347561)/2=3434065.50

Average receivables of CWS (649897+663119)/2 = 656508 (663119+633843)/2=663481

9)Return on Asset (ROA)

Return on Assets Ratio = Net Income/ Total Average Assets, where total average assets = (Assets in the beginning+ assets in the end)/2

For PWS for year 2014 Net Income = 1,26,516

Total Average Assets = (3,376,436+3,392,570)/2 = 3384503 Return to Asset Ratio = 126516/3384503 = 0.037

For CWS, for year 2014,

Net Income = (27,404)

Total Average Assets = (649,897+663,119)/2 = 656508

ROA= - 0.041 10)Return on Equity (ROE) Return on Equity Ratio = Net Income/Shareholder's Equity

For PWS for year 2014,

Net Income = 1,26,516 Shareholder's Equity = 1,228,793

ROE = 126516/1228793 = 0.10

For CWS, for year 2014,

Net Income = (27,404)

Stockholder's Equity = (8,407)

ROE = - 3.25 1.Using 2013 & 2014 ratios for your company, compare your company's 2013 ratios with 2014 ratios and describe the similarities and differences.