Ratio Analysis Jillian Croal DIT 1006 Spring 2003

Complete Ratio Set Ratio Analysis Division ADivision BDivision CConsolidated Current Ratio Quick Ratio Debt to Asset Ratio39.25%22.66%37.95%32.57% Return on Sales5.33%7.39%6.40% Return on Assets Return on Equity Average Collection Period AverageDays of Inventory

Ratios Comparison Chart

Division A Ratio Analysis Current Ratio indicates this division has poor cash management; does not earn efficient return on current assets Current Ratio indicates this division has poor cash management; does not earn efficient return on current assets Quick Ratio represents the firms ability to pay its current debt at a faster rate than similar industries Quick Ratio represents the firms ability to pay its current debt at a faster rate than similar industries Debt to Assets Ratio % indicates amount of financial leverage; higher risk than other industries in the same field Debt to Assets Ratio % indicates amount of financial leverage; higher risk than other industries in the same field Return on Sales- 5.33% profitability is high Return on Sales- 5.33% profitability is high Return on Assets-.16 indicates that the division needs to do a better job using the available resources Return on Assets-.16 indicates that the division needs to do a better job using the available resources Return on Equity-.19 division not making good use of debt Return on Equity-.19 division not making good use of debt Average Collection Period a bit lower than the average; indicated good return on sales Average Collection Period a bit lower than the average; indicated good return on sales Average Days of Inventory indicates that the inventory is held for too long, needs to be sold much more efficiently Average Days of Inventory indicates that the inventory is held for too long, needs to be sold much more efficiently

Division B Ratio Analysis Current Ratio-3.57 indicated poor cash management for this division did not earn much return on current assets Current Ratio-3.57 indicated poor cash management for this division did not earn much return on current assets Quick Ratio-2.16 the division’s ability to pay it’s current debt is decent Quick Ratio-2.16 the division’s ability to pay it’s current debt is decent Debt to Asset Ratio-22.66% average financial leverage in this division of the company Debt to Asset Ratio-22.66% average financial leverage in this division of the company Return on Sales-7.39% this is overall a good amount of profitability for this division Return on Sales-7.39% this is overall a good amount of profitability for this division Return on Assets-.20 the division is doing a very poor job with the resources that is has available to them Return on Assets-.20 the division is doing a very poor job with the resources that is has available to them Return on Equity-.18 lower than return on assets; not making good use of the divisions liabilities; not successfully leveraged Return on Equity-.18 lower than return on assets; not making good use of the divisions liabilities; not successfully leveraged Average Collection Period this is a decent average collection period in comparison to similar industries Average Collection Period this is a decent average collection period in comparison to similar industries Average Days of Inventory need to have a less value for the days in inventory to be more efficient Average Days of Inventory need to have a less value for the days in inventory to be more efficient

Division C Ratio Analysis Current Ratio-3.20 indicates poor management in the division since it does not earn much return on the current assets Current Ratio-3.20 indicates poor management in the division since it does not earn much return on the current assets Quick Ratio-1.97 the firm’s ability to pay its current debt is good Quick Ratio-1.97 the firm’s ability to pay its current debt is good Debt to Asset Ratio-37.95% greater risk also leaving room for a much greater return Debt to Asset Ratio-37.95% greater risk also leaving room for a much greater return Return on Sales-6.40% profitability of this division has much room for improvement Return on Sales-6.40% profitability of this division has much room for improvement Return on Assets-.18 division is not doing a very good job with the resources that is has Return on Assets-.18 division is not doing a very good job with the resources that is has Return on Equity-.22 indicates that the division is not making good use of it’s liabilities Return on Equity-.22 indicates that the division is not making good use of it’s liabilities Average Collection Period days this is a good collection period especially in comparison to other similar firms within the industry Average Collection Period days this is a good collection period especially in comparison to other similar firms within the industry Average Days of Inventory needs improvement in the average lifetime of the existing inventory for the division Average Days of Inventory needs improvement in the average lifetime of the existing inventory for the division

Consolidated Ratio Analysis Current Ratio-3.24 overall the company has poor cash management and needs improvement on the return of current assets Current Ratio-3.24 overall the company has poor cash management and needs improvement on the return of current assets Quick Ratio-1.97 the firm’s ability to pay it’s current debt is fair could be lower to improve Quick Ratio-1.97 the firm’s ability to pay it’s current debt is fair could be lower to improve Debt to Asset Ratio-32.57% the company is taking a fair amount of risk in the hope of a fair amount of reward Debt to Asset Ratio-32.57% the company is taking a fair amount of risk in the hope of a fair amount of reward Return on Sales-6.40% overall the company needs to do a better job using the resources that it has Return on Sales-6.40% overall the company needs to do a better job using the resources that it has Return on Assets-.18 this part of the company seeks major improvement in all it’s divisions Return on Assets-.18 this part of the company seeks major improvement in all it’s divisions Return on Equity-.20 overall the company needs to do a better job of using it’s liabilities to it’s advantage Return on Equity-.20 overall the company needs to do a better job of using it’s liabilities to it’s advantage Average Collection Period this is a good overall company collection period compared to the industry Average Collection Period this is a good overall company collection period compared to the industry Average Days of Inventory every division needs to do a better job of selling inventory quicker Average Days of Inventory every division needs to do a better job of selling inventory quicker