APPENDIX A Financial Analysis

# APPENDIX A Financial Analysis - APPENDIX A Financial...

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Financial Ratios First Quarter 1998 1989 1990 1991 Liquidity & Indetedness Current Ratio 1.80 1.59 1.45 1.35 Liquidity Ratio or Acid Test 0.881 0.720 0.669 0.545 Debt Ratio 54.55% 58.70% 62.70% 67.37% Debt to Equity Ratio 1.2 1.4 1.7 2.1 Ratios Appraising Funds M anagement - Turnover Relationship Average Daily Sales 4.71 5.59 7.48 7.98 Accounts Receivable 36.28 39.70 42.36 43.25 Inventory Turnover 5.11 4.41 4.67 Profitability Ratios Return on Assets 5.22% 4.62% 4.72% Profit Margin 1.83% 1.69% 1.63% Gross Margin 27.99% 28.61% 27.62% 27.30% Asset Turnover 2.857 2.735 2.887 Profit Percentage on Assets 5.22% 4.62% 4.72% BUTLER LUM BER COM PANY APPENDIX A: Financial Analysis Current Ratio: This ratio is declining showing that liabilities is increasing or assets are decreasing. In BLC’s case, both are growing but liabilities are going proportionately greater than assets. Acid Ratio Test: This ratio is below one and decreasing every year. This is perhaps the most important ratio in the analysis of BLC. It shows that current liabilities exceed the most liquid of BLC’s assets. BLC is incapable of quickly extinguishing its current liabilities in an emergency. Debt Ratio: The debt ratio is increasing a startling rate, increasing at 12.82% over the past 3.25 years. If the company were to fail, the liquidation of their assets should cover their debt. However, the debt to asset ratio could become 1 to 1 if

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## This note was uploaded on 05/11/2008 for the course AEM 2220 taught by Professor Perez,p.d. during the Spring '06 term at Cornell.

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APPENDIX A Financial Analysis - APPENDIX A Financial...

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