Ratio Analysis And Ratio Analysis

Total Assets $46,400 Less: Total Liabilities 26,000 Equal: Net Worth $20,400 Liquidity: $3,600 +Other Assets: $42,800 Total Assets: $46,400 -Total liabilities: $26,000 Net Worth: $20,400

5. Inventory Turnover: This ratio is rendered by taking the cost of goods sold, for a time period, divided by average inventory. This shows how many times a firms inventory is sold and replaced during the period of time that it is calculated for.

Liquidity ratios are the temporary capabilities of a business to compensate for its established requirements and unanticipated needs for cash. Suppliers and bankers are the short-term creditors who are mostly

Owner’s equity = $25,600 ($8,600 − $2,000 + $40,000 − $21,000) Total liabilities = $55,900 ($81,500 − $25,600)

Current ratio is type of liquidity ratio. It is a financial tool used to measure a company’s ability to pay off its short-term debts with its short-term assets. A company’s current ratio is expressed by dividing its current assets by its current liabilities. A higher current ratio means the company is more capable of paying off its debts. If the current ratio is under one, this suggests the company is unable to pay off its obligations if they were due at that point (Investopedia, 2013). Companies that have trouble collecting money for its receivables or have long inventory turnovers can run into liquidity problems because they are unable to lessen their obligations.

The paper illustrates that financial ratio analysis is an important tool for firm’s to evaluate their financial health in order to identify areas of weakness so as to institute corrective measures.

The total asset is $424 million, total liability is $349 million. Ended Aug 28, 2016

The company's financial health and stability are measured by the balance sheet and shows the amount of equity versus liabilities. Generating the total current assets of a company, total assets equal the calculation of cash ($50,000), and inventory ($34,000), and plus accounts receivable ($50,000), with the current assets equivalent of $134,000. Concurrent assets listed by Nybrostrand is only equipment (net of depreciation) $415,000, with the concurrent assets equaling $415,000. Total assets equals $549,000 from the sum of concurrent assets ($415,000) added to current assets ($134,000). The information solves the first half of the accounting equation ($549,000 = liabilities + equity). Liabilities are broken into two categories current and long-term liabilities. Current liabilities equal the figure of accounts receivable ($78,000) and property taxes ($16,900), with current liabilities sum being $94,900. Long-term liabilities there is only one long-term debt $127,000, meaning long-term liabilities are $127,000. Total liabilities figure ($221,900) is the computation of current liabilities and long-term liabilities.

Ratio analysis is a technique of analysis and interpretation of financial statements. However ratio analysis is not an end in itself. It is only a mean of better understanding of financial strengths and weaknesses of a firm. Calculation of mere ratio does not serve any purpose, unless several appropriate ratios are analyzed and interpreted. There are number of ratios which can be calculated from the information given in the financial, statements, but the analyst has to select the appropriate data and calculate only a few appropriate ratios from the same keeping in mind the objective of analysis.

The receivables turnover value is much higher than the ones in the industry. This is positive as it means that the gathering of accounts receivable is well managed.

Financial ratios are as listed: cash ratio, which was determined by dividing the cash amount ($101,041.10) and the current liability amount ($204,034.68), resulting in a cash ratio of 0.5%. Current ratio was determined by dividing the current assets ($262, 742.15) and current liabilities ($204,034.68), resulting in a current ratio of 1.3%. Quick ratio was figured by dividing the cash ($101,041.10) + ($57, 534.05) which is the short term investment + ($1,212, 849.60) the account receivable, net and ($204,034.68) the current liabilities to get the ratio of 6.7 %. Debt to asset ratio was figured by dividing the total liabilities of ($204,034.68) into the total assets of ($262,742.15) resulting in a ratio of 0.8% (Taylor, 2015).

A careful review of the fair value of Silver's assets and liabilities indicated that inventory, land, and buildings and equipment (net) had fair values of $65,000, $100,000, and, $300,000 respectively. Goodwill is assigned proportionately to Bristle and the noncontrolling shareholders.

Turnover | | | | | | Profit (Loss) before Taxation | 7,197 | 5,311 | 4,612 | 3,845 | 3,203 | Net Tangible Assets (Liab.) | 564,204 | 526,829 | 24,123 | 27,480 | 12,555 | Shareholders Funds | 25,421 |

Financial statement and ratio analysis is also used to drill down within the larger financial performance of the company as a whole to evaluate various divisions and product or service lines. These analyses are critically important as they are often used to enhance the firm’s credibility in the larger marketplace; assist in determining its own creditworthiness; and comparing its performance to that of potential competitors.

Ratio Analysis is a powerful tool of financial analysis. The absolute figures that are reported in the financial statements do not provide an understanding of the financial well-being of the firm. Ratios help in creating a qualitative judgement about the financial position of the company by making use of quantitative relationships. The standards of comparison of the ratios involve comparing them with: