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Financial Ratio Analysis

Instructions

1) You are to prepare the following ratio analysis calculations for the two years 2006 AND 2005 based on the following ratios listed below:

Current Ratio
Quick Ratio
Inventory Turnover in Days
Account Receivable turnover in Days
Accounts Payable Turnover in Days
Fixed Assets Turnover
Total Assets Turnover
Debt Ratio

Times Interest Earned
Cost of Borrowing (do your best on this one!)
Gross Profit Margin
Operating Profit Margin
Net Profit Margin
Return on Assets
Return on Equity

2) Prepare Common-size financials for the Balance Sheet and Income Statement for the two years.
3) 3-Factor Dupont Method for two years (Return on Equity)

4) Prepare a two-page memo that analyzes the financial health of the organization and make recommendations. The memo should address the following: a) liquidity, b) efficiency (aka turnover), c) debt, and d) profitability. What do you think about the health of the organization and its future? Remember, you are telling a story

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