Question

How can I explain these numbers in terms of the trends and positive/negative nature of the ratios?

Work Capital	$        9,351	$        7,478	$        6,466
Current Ratio	1.3	1.3	1.2
Accounts Receivable	9.4	10.7	10.5
Days Sales in RA	38.8	34.0	34.6
Inventory Turnover	5.0	5.9	5.8
Days Sales in Inventory	73.4	61.8	62.7
Times Interest Earning	8.0	11.1	11.2
Free Cash Flow	5,320	6,534	7,975
Profitability Measure
Cross Profit Margin	62.6%	60.7%	60.5%
Rreturn On Assets ROA	1.4%	7.4%	8.1%
Margin	3.5%	15.6%	16.6%
Turnover	0.40	0.47	0.49
Return On Equity ROE	5.9%	26.6%	26.1%
Margin	3.5%	15.6%	16.6%
Turnover	0.40	0.47	0.49
Laverge	4.2	3.6	3.2
EBITDA	8,843	10,656	12,431
Earning per Share EPS of Common Stock	0.29	1.5	1.7
Price -Eraning Ratio	146.7	28.3	25.4
Dividents per Share	1.5	1.4	1.3
Dividend Yield	3.5	3.3	3.1

Answer 1

Work capital: The working capital is Current Assets - Current liabilities. It is the amount of capital required for day to day business activities. An increasing trend explains that the current assets are rising more in proportion of the current liabilities and is negative nature.

Current ratio: Current ratio = Current assets / Current Liabilities. A ratio of 1.3 indicates that there are 130% of current assets as compared to current liabilities to pay them off. A current ratio of generally 2 is considered to e a healthy ratio.

Accounts receivable ratio: It represents how efficiently the firm is utilizing its assets. Formula = Net credit sales / AR. A lower ratio is indicating a lower utilization of assets and is negative in nature.

Days sales in AR: It shows the avg number of days required to collect money from AR. An increasing number indicates a negative ratio and means that more days are required to recover money from AR.

Inventory turnover: It is a measure of the number of times inventory is sold or used in a time period such as a year. The equation for inventory turnover equals the cost of goods sold divided by the average inventory. A decreasing inventory turnover ratio is negative in nature as it means inventories levels have increased.

Days sales in inventory: It shows the number of days required to turn the inventory into sales. An increasing number is a negative trend.

Times interest earning: is a measure of a company's ability to honor its debt payments. It may be calculated as either EBIT or EBITDA divided by the total interest payable. A lower number over time indicates a negative trend due to higher interest expenses or lower EBIT on same interest expenses.

Free cash flow: Free cash flow is calculated as net operating cash flow - Capital expenditures. It represents the cash the company is able to generate from business after spending on the maintenance required for its fixed assets. A lower free cash flow is a negative trend.

Gross profit measure: Calculated as gross profit / Net sales. A higher number means the gross margin improvement over years and is a positive trend.

Return on Assets: Return on assets = Net profit/ Total Assets. It shows the amount of profit earned on employing the assets. A lower number means a negative trend.

Margin	3.5%	15.6%	16.6% Negative
Turnover	0.40	0.47	0.49 Negative
Return On Equity ROE	5.9%	26.6%	26.1% Negative
Margin	3.5%	15.6%	16.6% Negative
Turnover	0.40	0.47	0.49 Negative
Laverge	4.2	3.6	3.2 Negative
EBITDA	8,843	10,656	12,431 Negative
Earning per Share EPS of Common Stock	0.29	1.5	1.7 Negative
Price -Earning Ratio	146.7	28.3	25.4 Negative
Dividents per Share	1.5	1.4	1.3 Positive
Dividend Yield	3.5	3.3	3.1 Positive