Ratio Analysis Based on the Financial Information Provided - 825 Words

Ratio Analysis Based on the Financial Information Provided (Essay Sample) Content: Youà ¢Ã¢â€š ¬re Name ----- Donà ¢Ã¢â€š ¬t write your name hereProfessorCourseDATE \@ "d-MMM-yy" 5-May-15Ratio AnalysisRatio Result Current Ratio 3.4 Quick Ratio 2 Receivables Turnover 9.2 times Days' Receivables 39.67 days Inventory Turnover 3.29 times Days' Inventory 110.94 days Fixed Assets Turnover 5.75 times Total Assets Turnover 1.84 times Times Interest Earned (TIE) 11.11 times Debt Ratio 52% Debt to Equity Ratio 108.33% Equity Multiplier 2.08 Profit Margin 23.74% Return on Assets (ROA) 43.68% Return on Equity (ROE) 91% Payout Ratio 25.37% Retention Ratio 74.63% Earnings Per Share (EPS) $2.18 Book Value Per Share $2.40 Price/Earnings Ratio 3.64 Market-to-Book Ratio 3.32 1 Current Ratio:Current ratio reveals an entityà ¢Ã¢â€š ¬s capability of paying current liabilities utilizing the assets which are convertible to cash in a shorter time period. The ratio of 3.4 is showing that the company has $3.4 of current assets to pay the current liability of every $1. 2 Quick RatioQuick ratio reveals an entityà ¢Ã¢â€š ¬s capability of paying current liabilities through utilizing its quick assets. The ratio of 2 is showing that the company has $2 of current assets to pay the current liability of every $1. 3 Receivables TurnoverAccounts receivable turnover is an efficacy ratio also called activity ratio that evaluate how many times the accounts receivable of a company can be transformed into cash during a particular period. The ratio of 9.2 times indicates that the company turns out its accounts receivable into cash 9.2 times a year. 4 Days' ReceivablesAverage collection period reveals the average span of time a company waits for sale proceeds. The period 40 days on average here is shorter one, which is favorable for the company. 5 Inventory TurnoverInventory turnover shows the inventory turns number on yearly basis. Expected to be higher here, this is not a good sign to the company. Results reveal that the company turns its inventory 3.29 times a year. 6 Days' InventoryDays in inventory ratio reveals efficiency in the management of inventory. Days are expected to be higher here, which is not a good sign to the company. Results are not favorable to the company as it takes the inventory almost 111 to convert to sales. 7 Fixed Assets TurnoverAn efficiency ratio computes the ability of a company to produce sales from its assets. Moreover, this ratio reveals how proficiently a company is using its assets to generate sales. The ratio indicates that 5.75 times the company has generated the sales for the year. 8 Total Assets TurnoverThe total assetà ¢Ã¢â€š ¬s turnover ratio of 1.84 is revealing that each $1 asset of the company is generating about $1.84 of sales. 9 Times Interest Earned (TIE)The TIE ratio, also called the interest coverage ratio measures the amount of income in proportion that can be utilized to deal with future interest expenses. About 11 times the income can be utilized to payoff future interest expenses. 10 Debt RatioA solvency ratio that evaluates the total liabilities a companyà ¢Ã¢â€š ¬s as a percentage of the companyà ¢Ã¢â€š ¬s total assets. It shows a company's capability of paying off liabilities by way of available assets.The results of 52% indicate that 52% assets are attached to liabilities. Debt to Equity RatioThis is liquidity ratio that determines the percentage of total debt a company has to its total equity. Greater the ratio, more the creditor financing i.e. bank loans is use up than investor financing i.e. shareholders. The company has 108% debt as compared to its equities. Equity MultiplierIt is a financial leverage ratio that rates the amount of a companyà ¢Ã¢â€š ¬s a...