Wgu Fnt1 Task 1 Essay

904 WordsAug 1, 20134 Pages
To: Company G CEO RE: Ratio Analysis-Company G Company G: Ratios for years 2011 and 2012 compared to industry standards. A. Current Ratio: The ability for a company to pay short term obligations is measured by this ratio. In 2011 Company G moved from 1.86 to 1.77. Compared to the 1.9 Home Center Retail Benchmarks industry ratio, the numbers are below standards. Current Ratio represents values above 2 quartile industry benchmarks data (1.4 to 2.1). Current Ratio represents a weakness for Company G. B. Acid Test Ratio: Determining the volume of short-term assets to cover immediate liabilities without selling inventory is the purpose for the Acid Test Ratio. Numbers below 1 could mean liabilities cannot be paid. A dive from 0.64…show more content…
Debt ratio percentages increased for Company G from 28.34% to 29.94%. Industry quartile is 30, 45 and 66 percent, putting Company G below average. Debt Ratio represents strength for Company G. G. Times-Interest-Earned Ratio: This ratio measures how capable Company G is to pay debt. An increment (31.12-35.17) puts Company G above industry quartile of 29.7/17.2/8.1. Times-Interest-Earned Ratio represents strength for Company G. H. Rate of Return on Net Sales: This ratio is used to find profit made per dollar sale. Company G ascended its percentage (5.43% to 6.13%). Average for the industry is a 4.60% according to Yahoo Finance. Last quartile industry data shows 7.55%, above Company G ratio. Rate of Return on Net Sales is of no concern for Company G. I. Rate of Return on Total Assets: Measures the company’s profitability relative to total assets. A percentage increment for Company G, from 12.30% to 13.68% (2011-12) keeps them above industry benchmarks (8.60% and 12.30%). Rate of Return on Total Assets represents strength for Company G. J. Rate of return on common stockholder’s equity: The ratio of return on common stockholder’s equity measures rate of return on the interest of ownership for the common stock owners. Company G’s rate of return ratio diminished (20.20% down to 18.46%). Although percentage decreased does not represents a negative, compared to quartile benchmarks of 12.80% and 16.30%. Rate of Return on Common Stockholder’s Equity

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