Write a narrative/explanation of the financial ratio. Financial Ratios Historical Ratios Beginning 01/06/2018 - Ending 31/5/2019...

Write a narrative/explanation of the financial ratio.

Financial Ratios

Historical Ratios
	Beginning 01/06/2018 - Ending 31/5/2019	Beginning 01/06/2019 -Ending 31/5/2020
Current Ratio	3.06	3.11
Quick ratio	0.98	0.92
Total Debt to Total Assets Ratio	0.31	0.31
Total Debt to Equity Ratio	0.46	0.44
Time-Interest-Earned Ratio	-	-
Inventory Turnover	2.83	2.82
Fixed Assets Turnover	0.94	0.97
Total Assets Turnover	0.31	0.31
Accounts Receivable Turnover	8.40	9.94
Average Collection Period	43.45	36.72
Gross Profit Margin %	48%	45%
Operating Profit Margin %	196%	210%
Return on Total Assets ( ROA )	87%	85%
Return on Equity ( ROE )	127%	122%

Expert Solution

Current ratio - The current ratio is a liquidity ratio that measures company's ability to pay short-term obligation or those due within one year.

Quick ratio - The quick ratio indicates a company's capacity to pay its current liabilities without need to sell its inventory or get additional financing.

Total debt to total assets - the total amount of debt relative to assets owned by the company.

Total debt to equity ratio - it is a measure of the degree to which company financing it's operations through debt versus wholly owned funds.

Inventory turnover - it is a ratio showing how many times a company has sold and replaced inventory during na given period.

Fixed assets turnover -Shows what portion of sales is generated from fixed assets investment.

Total assets turnover ratio - it measures the value of a company sales to the value of its assets

Account receivable turnover- it is a according measure used to quantify a company effectiveness in collecting receivable or money owed by clients.

Average collecting period - is the average number of days between date or credit sale were made and the date the actual collection is made.

Gross profit margin - ratio that indicates the performance of a company sales and production. The percentage of profit on the sales made.

Operating profit margin-it measures the how much profit company makes on sales after paying the variable cost of production such as wages and raw material but before paying interest and tax.

Return on total assets - is the ratio that measures company's earnings before interest and tax realtive to its total assets and it indicates how effectively company is using its assets.

Return on equity- is a measure of financial performance calculated by dividing net income by share holders equity.

ekkarill92 answered 2 years ago

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