157_634718044028356491_Sam_s_Town_2011

157_634718044028356491_Sam_s_Town_2011

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Unformatted text preview: 000 + $481,425) / 2)= 8.09% The company is earning 8.05% annually on the assets in which management has invested. This rate needs to be compared to the ROA of other companies in the same industry to see how it compares. This will tell us whether management is doing a good job investing in assets and then being able to earn profits with them. ROE $35,350 / (($171,000 + $201,350) / 2)= 18.50% The company is earning 18.33% annually on the shareholders' investement in the in the company. The shareholders would most likely be very pleased with this rate of return. Debt to Equity $280,075 / $481,425= Sam's Town Ratios (continued) Accounts Receivable Turn $300,000 / (($38,000 + $114,000) / 2)= Average Collection Period 365 / 3.95 = 92.41 days Inventory Turn $135,000 / (($60,000 + $50,000) / 2) = 58.28% 57.92% of the financing of the company is with debt. 3.98 The company turned over or collected their accounts receivable 3.95 times during the year. On average, it takes 92.41 days to collect their accounts receivable, which is very high and therefore the person in charge of collections is not doing a good job. 2.45 The company turned over or sold their inventory 2.45 times during the year. Average Days' Sales 365 / 2.45 = 148.98 days On average, the company has 148.98 days of sales in stock, which is too high. It is very costly to store inventory. The purchasing manager or the production manager is not doing a good job....
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This document was uploaded on 03/23/2014.

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