Question

2a: Using the ratios below, appraise the trend (2007-09) of Flash's liquidity. Cite specific ratios to justify your analysis.
	2007	2008	2009	TREND	INTERPRETATION
Current ratio	2.10	1.90	1.90	-9.5%	Negative, less liquidity
Quick ratio	1.30	1.10	1.20	-7.7%	Negative, less liquidity
Days sales in receivables	52.00	58.00	60.00	15.4%	Negative, slower collections
Days cost of sales in inventory	56.00	59.10	58.00	3.6%	Negative, slower turnover
Days cost of sales in payables	18.00	22.80	19.80	10.0%	Positive, paying more faster
2b: Using the ratios below, appraise the trend (2007-09) of Flash's leverage. Cite specific ratios to justify your analysis.
	2007	2008	2009	TREND	INTERPRETATION
Long-term debt to total capital	0.00	0.00	0.00	0.00	This portion is blank because the company does not have any long-term debt to total capital
Long-term debt to equity	0.00	0.00	0.00	0.00	This portion is blank because the company does not have any long-term debt to equity
Times interest earned	8.9	1.4	6.7	570.00%	Positive, better coverage
Full burden coverage	0.9	0.6	0.8	-20.00%	Negative, lower coverage
2c: Using the ratios below, appraise the trend (2007-09) of Flash's asset use (efficiency). Cite specific ratios to justify your analysis.
	2007	2008	2009	TREND	INTERPRETATION
Fixed asset turnover	17.1	16.4	15.8	1480.00%	Positive, faster turnover
Total asset turnover	2.8	2.6	2.5	150.00%	Positive, faster turnover
2d: Using the ratios below, appraise the trend (2007-09) of Flash's profitability. Cite specific ratios to justify your analysis.
	2007	2008	2009	TREND	INTERPRETATION
Gross margin	18.90%	15.50%	18.90%	-81.100%	Negative, less or no improvement
Operating profit margin	5.60%	1.10%	5.50%	-94.500%	Negative, less or no improvement
Return on sales	2.90%	0.20%	2.80%	-97.200%	Negative, less or no improvement
Return on total assets	8.10%	0.40%	7.10%	-92.900%	Negative, less or no improvement
Return on equity (ROE)	13.30%	0.80%	12.70%	-87.300%	Negative, less or no improvement
Return on invested capital (ROIC)	9.20%	1.70%	8.50%	-91.500%	Negative, less or no improvement
2e: Interpret the DuPont Formula ratios by explaining if its four ratios are a valid substitute for the ratios in Q1a-1d above. Cite specifics.
	2007	2008	2009	TREND	INTERPRETATION
DuPont Formula - ROE	13.30%	0.80%	12.70%	-87.300%
Profitability	2.90%	0.20%	2.80%	-97.200%	Negative, less improvement
Efficiency	2.80%	2.60%	2.50%	-97.500%	Negative, less improvement
Leverage	1.60%	1.80%	1.80%	-98.200%	Negative, more financial risk
ROE Check	13.30%	0.80%	12.70%	-87.300%
2f: Based on Flash's 2007-09 performance, make a qualitiative summary judgment about it below.

Answer 1