Question

• Further analyze the financial ratios and trend analysis to evaluate and make management decisions.
• Develop a business decision that evaluates a growth or improvement opportunity for the company.
• Using analysis, determine whether it should be accepted or rejected by the organization.
• Prepare a strategic plan to the board of directors of the company that includes analysis of financial information and recommendations for increased profitability.
• As part of your analysis, be sure to evaluate risks and opportunities as well as alternatives to the proposed plan.

The accounting period was the month of may we completed journal entries, trial balance, financial statements if you can see my prior questions the one before this once included the journal entries.

• •Profit Margin Ratio=Net Income/Net Sales

  •134,196 /215,800=62%

  •Return On Assets=Net Income/Averaged Total Assets

  •134,196/748871=17%

  •Return on Equity=Net Income/Share Holder Equity

  •134196/530196=25%

• •Current Ratio=Current Assets/Current liabilities

  •453871/218675=2.07

  •Quick Ratio=total current assets-inventory-prepaid expenses/current liabilities

  •453871-0-34000/218675=1.92

  •Cash Ratio=Cash+cash Equivalents/Total Current Liabilities

  •358,931/218675=1.64

• •Debt to equity Ratio=Total Liabilities/Total Share holders' Equity

  •218675/530196=41%

  •Equity Ratio=Total Equity/Total Assets

  •530196/748871=71%

Answer 1

As per the following ratios given above, we could easily conclude that the company is an ongoing company and will have a bright future in the market. The profits which the company is making is nearly about 62% of the sales which is actually a sort of supernormal profit in the long term Market. Current ratio and Quick ratio indicates the feasibility of the company. As it is greater than 1, hence we can easily rely on the company for investment decisions. Profits here are increasing at a good pace and might reach it's top. The debtequity ratio is 41% which indicates that there is not much amount of interest to be paid other than dividends to shareholders. The return are also on it's peak and might get into more exposure in future terms. The only drawback I would point out of that is Equity ratio which is more than the Assets and this is full of risk with lessened opportunity in the market for speculation.