Name strengths aitio data is listed below for Gallery of Dreams, Construct a lis
ID: 2566468 • Letter: N
Question
Name strengths aitio data is listed below for Gallery of Dreams, Construct a list of Weaknesses for the firm after analyzing the ratios. Gallery of Dreams Ratios Ratio Industry 2015 2014 2013 2.50x 4.48 4.0x 3.48x 0.96x 3 Quick Average collection period 1.18x 1.24x 9.09x 34.04% 18.91% 0.80x 1.47x tion11 days 16 days 15 days 9 days 8 days tory turnover 1.19x 11 days Days payable outstanding Fixed asset turnover Total asset turnover Debt ratio Long term debt to total capitalization 2.30x 15 days 17.50x 2.80x 62.00% 12 days 5 29.47% 39.17% 25.53% 14.09% 22.33% Times interest earned Fixed charge coverage Gross profit margin 9.93x 22.02x 19.00x 14.23x erating profit margin Net profit margin Return on investment Return on equity 8.69x 31.10% 8.06% 4.32% 9.21% 11.34% 4.59x 59.21% 22.05% 11.89% 17.97% 24.14% 4.47x 59.39% 21.86% 11.00% 18.28% 27.51% 58.52% 20.52% 10.97% 18.35% 29.88%Explanation / Answer
Strengths of Gallery of Dreams are: 1. Current ratios is above industry average and increasing. 2. Quick ratios is above industry average and increasing. 3. Overall debt is below industry average and is declining significantly. 4. Times Interest Earned ratios shows interest are covered by profits and number of times covered is increasing year by year. 5. Profitability is good and above the industry average as shown by gross, operating and net profit ratios. Weakness of Gallery of Dreams are: 1. Average Collection period is increasing and above industry average. 2. Inventory Turnover ratio is below industry average, indicating the firm doen not move inventory well. 3. Fixed Turnover Ratio is below industry average even though it is increasing. 4. Total Assets turnover ratio is decreasing which shows either sales are declining or investments in assets are high in relation to sales. 5. Return on invetsments is declining due to significant invetment in assets. 6. Return on equity is declining, this may be due to significant decline in debt.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.