1. Ratio Analysis Jillian Croal DIT 1006 Spring 2003

2. Complete Ratio Set Ratio Analysis Division ADivision BDivision CConsolidated Current Ratio3.033.573.203.24 Quick Ratio1.832.161.97 Debt to Asset Ratio39.25%22.66%37.95%32.57% Return on Sales5.33%7.39%6.40% Return on Assets0.160.200.18 Return on Equity0.190.180.220.20 Average Collection Period45.5840.5445.0243.63 AverageDays of Inventory60.3858.1459.5359.38

3. Ratios Comparison Chart

4. Division A Ratio Analysis Current Ratio- 3.03 indicates this division has poor cash management; does not earn efficient return on current assets Current Ratio- 3.03 indicates this division has poor cash management; does not earn efficient return on current assets Quick Ratio- 1.83 represents the firms ability to pay its current debt at a faster rate than similar industries Quick Ratio- 1.83 represents the firms ability to pay its current debt at a faster rate than similar industries Debt to Assets Ratio- 39.25% indicates amount of financial leverage; higher risk than other industries in the same field Debt to Assets Ratio- 39.25% 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-45.58 a bit lower than the average; indicated good return on sales Average Collection Period-45.58 a bit lower than the average; indicated good return on sales Average Days of Inventory-60.38 indicates that the inventory is held for too long, needs to be sold much more efficiently Average Days of Inventory-60.38 indicates that the inventory is held for too long, needs to be sold much more efficiently

5. 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-40.54 this is a decent average collection period in comparison to similar industries Average Collection Period-40.54 this is a decent average collection period in comparison to similar industries Average Days of Inventory-58.14 need to have a less value for the days in inventory to be more efficient Average Days of Inventory-58.14 need to have a less value for the days in inventory to be more efficient

6. 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- 45.02 days this is a good collection period especially in comparison to other similar firms within the industry Average Collection Period- 45.02 days this is a good collection period especially in comparison to other similar firms within the industry Average Days of Inventory-59.53 needs improvement in the average lifetime of the existing inventory for the division Average Days of Inventory-59.53 needs improvement in the average lifetime of the existing inventory for the division

7. 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-43.63 this is a good overall company collection period compared to the industry Average Collection Period-43.63 this is a good overall company collection period compared to the industry Average Days of Inventory- 59.38 every division needs to do a better job of selling inventory quicker Average Days of Inventory- 59.38 every division needs to do a better job of selling inventory quicker