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Published byShannon Cannon Modified over 9 years ago
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DENVER MANUFACTURING CORPORATION RATIO ANALYSIS
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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
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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
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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
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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
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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
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COMPARISONS
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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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