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Unformatted text preview: (($60,000-$1,000) + ($69,500-$1,390))/2)=
365 / 4.41 = 83 days $110,000 / (($50,000 + $140,000)/2) $87,577 / ($349,000 + $559,344)/2)
$231,767 / $559,344 = $191,767 = = 1.72 The company turns over its accounts receivable 4.41
times during the year. On average, it takes 83 days for this company to collect its accounts receivable,
which is too high.
1.16 times 19.28% 41.44% $87,577 / (($205,800 + $327,577) / 2) $329,344 / = 4.41 times The company turns over or sells its inventory 1.16 times during
the year, which is low. This means the company is carrying too
much inventory in stock compared to the volume of sales that it has.
Carrying too much inventory is expensive and a poor use of resources.
ROA tells us how well the company uses its assets to create profits. Debt to Equity tells us how much of a company's total financing is with debt.
= 32.84% ROE gives us profits as a percentage of shareholder's equity. It tells us
how well a company manages its operations, financing and investing.
ROE tells us what rate the company is earning on the amounts the
owners have invested in the company plus the amounts the owners
have left in the business from prior earnings. A rate of 32.84% is
very high, unless the investors think this company is a very
risky venture, in which case they would want to be compensated a
a higher annual rate.
The company currently has $1.72 in current assets for each $1.00 that it owes
in current liabilities. The company might have trouble meeting its current
obligations since it will have to collect most of its Accounts Receivable within
the next month in order to be able to pay the amounts it owes that are due
within the next month. The current ratio is probably too low for this company....
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This document was uploaded on 03/23/2014.
- Fall '14