The Financial Fitness Of Chester, Inc.

1200 Words5 Pages
This report is designed to provide an evaluation of the financial fitness of Chester, Inc. through the creation and analysis of a full set of financial statements. Methods that will be used to analyze the income statement, balance sheet and statement of cash flows include: horizontal and vertical analysis, ratio analysis and comparison to competitors and the industry. All calculations used to create the financial statements and analyze them can be found in the appendix of this document. A list of differences between the presentation of these financials and International Financial Reporting Standards will also be included at the request of management. Results of this analysis shows that Chester, Inc. is performance is under industry averages in several areas, particularly in liquidity and profitability. The findings of this report has found that the current performance of Chester, Inc. is not positive. Chester, Inc.’s liquidity ratios are steadily eroding over the three-year period. Profitability ratios are showing a trend that is slightly above industry averages, while being below their main competition each year. Solvency ratio analysis has showed the firm having sufficient leverage, but cash flow issues make us believe that acquiring more debt will not be beneficial to the company. A detailed explanation of the individual ratios used to draw these conclusions appear in the ratio analysis section of this report. Ultimately it is up to management to take action to remediate

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