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DENVER MANUFACTURING CORPORATION RATIO ANALYSIS. DIVISION A STRENGTHS WEAKNESSES Financial Statements  Current Ratio of 2.67  Quick Ratio of 1.59 

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Presentation on theme: "DENVER MANUFACTURING CORPORATION RATIO ANALYSIS. DIVISION A STRENGTHS WEAKNESSES Financial Statements  Current Ratio of 2.67  Quick Ratio of 1.59 "— Presentation transcript:

1 DENVER MANUFACTURING CORPORATION RATIO ANALYSIS

2 DIVISION A STRENGTHS WEAKNESSES Financial Statements  Current Ratio of 2.67  Quick Ratio of 1.59  Avg. Days of Inventory of 60.38  Debt to Asset Ratio of 41.85%  Return on Sales of 4.76%  Return on Assets of 0.15  Return on Equity of 0.18  Avg. Collection Period of 60.38 Days

3 DIVISION B STRENGTHS WEAKNESSES Financial Statements  Debt to Asset Ratio of 22.71%  Return on Sales 9.08%  Return on Assets 0.23  Return on Equity 0.22  Avg. Collection Period of 41.39 Days  Avg. Days of Inventory 60.11  Current Ratio of 3.63  Quick Ratio of 2.23

4 DIVISION C STRENGTHS WEAKNESSES Financial Statements  Quick Ratio of 1.82  Debt to Asset Ratio of 29.48%  Return on Sales of 9.7%  Return on Assets of 0.29  Return on Equity of 0.30  Avg. Collection Period of 39.67 Days  Avg. Days of Inventory of 61.81  Current Ratio of 3.07

5 COMBINED DIVISIONS STRENGTHS Financial Statements  Quick Ratio 1.84  Debt to Asset Ratio 30.7%  Return on Sales 7.93%  Return on Assets 0.22  Return on Equity 0.24  Avg. Collection Period of 42.13 Days  Avg. Days of Inventory of 60.77

6 RATIOS COMPARISON Division A Division B Division C Consolidated Current Ratio2.673.633.073.06 Quick Ratio1.592.231.821.84 Debt to Asset Ratio41.85%22.71%29.48%30.70% Return on Sales4.76%9.08%9.70%7.93% Return on Assets0.150.230.290.22 Return on Equity0.180.220.300.24 Average Collection Period45.6341.3939.6742.13 Average Days of Inventory60.3860.1161.8160.77

7 COMPARISONS

8 AREAS NEEDING IMPROVEMENT Current Ratio –The ratio is too high, meaning more profit should be earned on the current assets.  Solution: Improve cash management.


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