Using the most recent annual report of the company you have chosen to study and that you
Question:
Using the most recent annual report of the company you have chosen to study and that you have accessed online at the company's website, examine the financial statements and accompanying notes of your company. Conduct a comprehensive financial analysis for the past two years, as follows. (Round to one decimal place.)
• Operating asset management analysis: current ratio, quick ratio, receivables turnover, days' sales uncollected, inventory turnover, days' inventory on hand, payables turnover, days' payable, and financing period
• Profitability and total asset management analysis: profit margin, asset turnover, and return on assets
• Financial risk analysis: debt to equity ratio, return on equity, and interest coverage ratio
• Liquidity analysis: cash flow yield, cash flows to sales, cash flows to assets, and free cash flow
• Market strength analysis: price/earnings (P/E) ratio and dividend yield
Financial StatementsFinancial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial... Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...
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Step by Step Answer:
Operating asset management Current ratio is calculated by dividing the current assets with current liabilities It shows the companys ability to repay their short term obligations like accounts payables salaries and dividend payable etc A higher current ratio indicates higher liquidity position of the company and lower ratio indicates less liquidity position Current ratio will be calculated by using following formula Current Ratio Current Assets Current Liabilities Calculate the Current Ratio Current Ratio Current Assets Current Liabilities According to the provided information the current ratio in 2012 is 48000 36000 13 times According to the provided information the current ratio in 2011 is 40000 44000 09 times Calculate the Quick Ratio Quick Ratio is also called as acidtest ratio It measures the companys shortterm liquidity position and it tells about the companys ability to meet their short term obligations Quick ratio is one of the best measures to check the liquidity of the firm because it includes only cash and cash equivalents Quick ratio will calculate by using below formula Quick Ratio Quick Assets Current Liabilities 2012 Quick assets calculation Inventorys for 2012 is 14000 Quick Assets for 2012 Current Assets Inventories 4800014000 34000 According to the provided information the quick ratio in 2012 is 34000 36000 09 times According to the provided information the quick ratio in 2011 is Inventorys for 2011 is 10000 Quick Assets for 2011 Current Assets Inventories 40000 10000 30000 30000 44000 07 times Calculate the Accounts receivables turnover Accounts receivable turnover ratio is calculated by divide the net annual sales by the average accounts receivables It measures how many times the receivables accounts are collected during an accounting cycle A higher turnover ratio indicates more favorable to the company and the lower ratio is unfavorable This ratio will be calculated by using following formula Average accounts receivable Sales Accounts receivable turnover According to the provided information the receivable turnover in 2012 is 360000 16000 20000 2 20 times According to the provided information the receivable turnover in 2011 is 290000 12000 16000 2 207 times Calculate the Days Sales uncollected Days sales uncollected Days in accounting period Receivables turnover According to the provided information the days sales uncollected in 2012 is 365 20 1825 days According to the provided information the days sales uncollected in 2011 is 365 207 1763 days Calculate the Inventory turnover ratio Inventory turnover ratio is calculated by dividing the cost of goods sold by the average inventory The higher inventory turnover ratio indicates good performance and lower ratio indicates inefficiency in inventory control The following is the formula for calculate the inventory turnover Inventory turnover Cost of goods sold Average inventory According to the provided information the inventory turnover in 2012 is 224600 10000 14000 2 187 times According to the provided information the inventory turnover in 2011 is SI 76000 8000 10000 2 195 times Calculate the days inventory on hand Days inventory on hand Days in accounting period Inventory turnover According to the provided information the days inventory on hand in 2012 is 365 187 1952 days According to the provided information the days inventory on hand in 2011 is 365 195 1872 days Calculate the Payables turnover Accounts payables turnover ratio measures the shortterm liquidity position of the business and also measures the speed of payments like how many times during an accounting cycle period the amount is equal to average accounts payables and is paid to suppliers by a business Payable turnover Cost of goods sold changes in inventory Average accounts payable ...View the full answer
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Related Book For 
Principles of Financial Accounting
ISBN: 978-1133939283
12th edition
Authors: Belverd E. Needles, Marian Powers
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