615 hw1 report

615 hw1 report - 11.19 is very good which indicates a low...

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Report On Scully Corporation Overall the profitability of the Scully Corp. is high i.e. 15% in 2011. The Profitability Ratios: Profit Margin Ratio is 15% which is very good; return on assets is 24.46% also very good and return on equity is 16.03% good also. The Liquidity Ratios: Current ratio is 2.86% is good which says their cash flow is good also the Acid test ratio 2.06% is pretty good .This means that the company’s collection period which is 81days is within their credit terms 90 days also the inventory holding period is 52 days and the average is 60 days which shows their inventory management is very good and thus there are no cash flow problems. Their debt to total ratio of
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Unformatted text preview: 11.19% is very good which indicates a low level of risk. Their payout ratio is 79% which means their paying very high dividends. The company is good but the problem is that they are paying very high dividends so maybe they are not planning to expand and they want to leave the market thus they are clearing their inventory. Also, their P/E ratio and payout ratio is higher than the industry average which means they are not trustworthy and thus one should investigate and then invest in the company....
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