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Case3-1 - Case3Exercise1 TheLakesideCompany December31,2009...

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Case 3 - Exercise 1 The Lakeside Company Analytical Review Procedures December 31, 2009 Prepared by: . Date: 02/07/2011 (a)  Compute the financial ratios listed in Exhibit 3-2 for Lakeside for the years  ended December 31, 2007 and December 31, 2008.  Comment on any large  fluctuations, unusual fluctuations, or lack of expected fluctuations.  Also, give  an   overall   conclusion as to the significance of the change in Lakeside’s  liquidity, solvency, and profitability positions from 2004 to 2005.   Use the  following format. [Use Case3.xls for a spreadsheet to compute the ratios]. Ratio 2007 2008 Significance of Change Current 1.35 1.36 No significant fluctuation, indicating a  stable liquidity position (based on this  measure of liquidity) Average Days  Inventory on Hand 93.11 100.55 The ratio shows that the company has  not managed its inventory properly. It  also shows how many times inventory  turnover during the year. Average Days to  Collect Receivables 22.07 26.35 Since the increase in the average days  to collect the receivable it might be a  concern for the company. This shows  that the company should be more  aggressive in collecting the money. Debt-to-Total Assets  Ratio 74.4 74.5 No significant fluctuation, measures the  firm’s assets financed by debt. The  lower the ratios are the better off for the  firm.  Creditors view debt ratio with  concern.
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