Ratio Analysis Division A, Division B, Division C, and Consolidated

Division A The current and quick ratios are all quite high, which is a good thing, but the lowest out of the the 3 divisions. Profit Margin, return on assets, and return on equity are lower than the others. They are not making a good amount of money. Average days of inventory is the lowest, tied with Division B, which means they are selling inventory quickly.

Division B The highest current and quick ratio. They have many assets and little liabilities. Slightly higher profit margin, return on assets, and return on equity but still a little low. Higher average collection period so it takes them longer to receive payments, but not significantly larger.

Division C A higher profit margin, return on assets, and return on equity then others, which shows they make good use of their resources. A high current ratio but a low quick ratio, which shows they have a large inventory. –This is shown by the large average days of inventory number. They have a large amount of inventory in the warehouse which isn’t good.

Overall Company The company has good current ratios. This shows that have plenty of assets available to handle liabilities. Generally low profit margins but still enough to be making good money. A normal average collection period for a company. Has high average day of inventory. There products might not sell quickly or they sell a product that doesn’t spoil. But the number is still quite high.