Essay on Ratio Analysis Article

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Baderman Island Resort Financial Summary – Group C Jana Davis, Cat Capra, Liz McCaw, Elly Ponce, Raymond Robinson, Richard Rasmussen, Sam Mason ACC/291 Principles of Accounting II July 14, 2012 Lori McKinney | Baderman Island Resort | Memo To: CEO of Baderman Island Resort From: Team C CC: Date: [ 7/16/2012 ] Re: Ratio Analysis Memo CEO of Baderman Island Resort, In the evaluation of liquidity ratios, the revenue from the income statement finds the Tenney at Night to be the most profitable and the Kayfe as the least profitable. The balance sheet states the Morgan Bistro has the best debt to asset ratio of 12.18% and the Kayfe with the highest debt to ratio of 26.49%. The balance sheet also states the Kayfe has the…show more content…
Long term creditors will want to ensure Baderman Island Resort will be able to continue to develop more assets. Long term creditors also want to ensure that Baderman Island Resort is able to handle the long term financial debt. Solvency ratios will also let creditors and stockholders know how fast assets can be turned into cash. The overall evaluation reveals that Baderman Island Resort is profitable and is able to continue to expand. The overall evaluation also tells us that Baderman Island has the ability to handle short term and long term debt. Following are the specific calculations for each of the ratios reviewed. <Nice job Liz – Just needs your final polish, but I can paste in whatever you provide> Return on Assets / Return on Common Stockholders’ Equity Ratios In the United States as in the world profitability ratios are the most important issue as Without them in a form that is simple to understand there would be not company. Basically The profitable ratios are divided into two types, returns and margins and they show the overall Efficiency and performance Ratios that show margins represent the firm's ability to Translate sales dollars into profits at various stages of measurement. Ratios that Show returns represent the firm's ability to measure the overall efficiency of the Firm in generating returns for its shareholders. The gross profit margin looks at cost of goods sold as a percentage of sales.
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