Financial Rations Instructions: Use the financial statements provided below to c

Question

Financial Rations

Instructions: Use the financial statements provided below to calculate the following financial ratios: write your own assessment of the company's financial performance, using those ratios to support your conclusion. What can you conclude about the company's liquidity, solvency, and profitability? Be sure to include the ratios calculations to support your conclusions.

2012 2011 1.   Current Ratio 2.   Quick Ratio 3.   Long-Term Debt-to-Equity Ratio 4.   Debt-to-Equity Ratio 5.   Long-Term Debt Ratio 6.   Accounts Receivable Turnover Ratio (Assume that 60% of Sales are credit) 7.   Inventory Turnover Ratio (Assume 2011 beginning inventory was -0-.) 8.   Asset Turnover Ratio 9.   Gross Profit Percentage 10. Net Profit Margin Percentage 11. Return on Assets 12. Return on Equity

Explanation / Answer

   2012 2011 1.   Current Ratio       10.915        6.715 2.   Quick Ratio       11.307        7.524 3.   Long-Term Debt-to-Equity Ratio        2.785        3.834 4.   Debt-to-Equity Ratio        2.785        3.834 5.   Long-Term Debt Ratio        2.866        3.988 6.   Accounts Receivable Turnover Ratio (Assume that 60% of Sales are credit)       25.491        8.908 7.   Inventory Turnover Ratio (Assume 2011 beginning inventory was -0-.)       (0.715)       (0.450) 8.   Asset Turnover Ratio        0.163        0.076 9.   Gross Profit Percentage        0.731        0.806 10. Net Profit Margin Percentage        0.375        0.311 11. Return on Assets        0.061        0.024 12. Return on Equity        0.237        0.118

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