Problem #4 (36 points) ratios for your company (show your work for full and part

Question

Problem #4 (36 points) ratios for your company (show your work for full and partial credit) Compare the ratios to the industry averages given, and state for each ratio wbether it signifies a strength or a weakness for your compary Ratio calculation (2 points each) Current Ratio Strength or Weakness (I point cach) si Industry Average 1.50 Quick Ratio 1.00 Inventory Turns 3.00x Days Sales Outstanding 60 days 1.5x Fixed Asset Turmover 75x Total Asset Turnover 1056 Return on Assets 25% Return on Equity 15% Profit Margin on Sales 25% Operating Margin 21x Times Interest Earmed 46% Debt Ratio

Explanation / Answer

I have chosen company as "Amazon" and the data i have taken is for 2017
1)Current ratio=current assets/current liabilites
=60197000/57883000=1.04
weakness

2)Quick ratio
=(current assets-inventory)/current liabilites
=(60197000-16047000)/57883000=0.76
weakness

3) Inventory turnover
=cost fo goods sold/inventory
=111934000/16047000=6.98
strength

4)Days sales outstanding
=(365*acc rec)/sales
=(365*13164000)/177866000
=27.01 dyas
strength

5)Fixed asset turnover= sales/fixed assets
=177866000/48886000=3.64
Strength

6)Total asset turnover= sales/total assets
=177866000/131310000=1.35
Strength

7)return on assets=net profit/assets
=3033000/131310000=2.31%
Weakness

7)Return on equity= net profit/equity
=3033000/27709000=10.95%
weakness

8)Profit margin=net profit/sales
=3033000/177866000=1.71%
weakness

9)Operating margin= operating profit/sales
=4106000/177866000=2.31%
weakness

10)Times interesr earned= ebit/interest
=4106000/848000=4.84
weakness

11)Debt ratio=debt/total assets
=103601000/131310000=7(%
Weakness

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