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Financial Ratios Analysis Report

This document contains a student's calculations and analysis of 14 financial ratios for a company. The ratios are compared to industry averages to determine if the company's ratios are low, high, or okay. Some of the key ratios calculated include: - Current ratio of 3.23, which is low compared to the industry average of 4.2. - Quick ratio of 1.24, which is low compared to the industry average of 2.2. - Days sales outstanding of 45.625/46 days, which is high compared to the industry average of 36 days. - Total debt to total capital ratio of 0.48/48%, which is high compared to the industry average of 36.4

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bless erika lendro
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337 views4 pages

Financial Ratios Analysis Report

This document contains a student's calculations and analysis of 14 financial ratios for a company. The ratios are compared to industry averages to determine if the company's ratios are low, high, or okay. Some of the key ratios calculated include: - Current ratio of 3.23, which is low compared to the industry average of 4.2. - Quick ratio of 1.24, which is low compared to the industry average of 2.2. - Days sales outstanding of 45.625/46 days, which is high compared to the industry average of 36 days. - Total debt to total capital ratio of 0.48/48%, which is high compared to the industry average of 36.4

Uploaded by

bless erika lendro
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

BM1904

NAME: RALPH LOUISE PONCIANO DATE: BSBA-OM401 A SCORE:

Financial Ratios (14 items x 10 points)

Compute the following financial ratios and interpret the results (Low, High, OK) based on the given industry averages. Write your answers on the spaces
provided.

Industry
Ratio Formula Calculation Comment
Average

Current
Current Assets 1,000,000 4.2
LOW
Current liabilities =3.23
310,000

Quick
Current Assets – Inventories 385,000 2.2
LOW
Current liabilities =1.24
310,000

Inventory turnover
Sales 3,000,000 10.9
LOW
Inventories =4.88
615,000

Days sales outstanding


Receivables 375,000 36 days
HIGH
Annual Sales/365 =45.625∨46 days
3,000,000/365

Fixed assets turnover


Sales 3,000,000 2.8
OK
Net fixed Asset =3
1,000,000
\
Total assets turnover
Sales 3,000,000 1.8
OK
Total Assets =1.5
2,000,000

04 Task Performance 1 *Property of STI


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BM1904

Total debt to total Total debt 860,000 36.4%


capital Total debt + Equity =0.48∨48 % HIGH
1,800,000

04 Task Performance 1 *Property of STI


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BM1904

Industry
Ratio Formula Calculation Comment
Average

Times-interest-earned
EBIT 283,000 6.0
LOW
Interest Changes =3.21
88,000

Operating margin
EBIT 283,800 10.0%
OK
Sales =0.0943∨9.43%
3,000,000

Profit margin
Net Income 117,500 5.0%
LOW
Sales =0.391∨3.92
3,000,000

Return on total assets


Net Income 117,500 9.0%
LOW
Total Assets =0.5875∨5.88 %
3,000,000

Return on common Net Income 117,500 15.0%


LOW
equity Common Equity =1.25∨12.5
940 , 000

Return on invested EBIT (1-T) 283,800(1−0.40) OK


Total Interested Capital =0.0946 0 r 9.46 10.8%
capital
1,800,000

Basic earning power


EBIT 283,800 18.0%
LOW
Total Assets =0.1416∨14.16
2,000,000

Rubric for grading:


CRITERIA POINTS
Complete solution with correct answer 10
Last two (2) major steps of the solution are incorrect 8
Half of the solution is correct 6
First two (2) major steps of the solution are correct 4
First major step of the solution is correct 2

04 Task Performance 1 *Property of STI


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BM1904
Reference
Brigham, E. F. & Houston, J. F. (2017). Fundamentals of financial management (concise) (9th ed.). Boston, MA: Cengage Learning.

04 Task Performance 1 *Property of STI


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