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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.
- Fall '14