## (solution) Financial Analysis Project Student Name: Go to the CanGo intranet

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Financial Analysis Project

Student Name: Go to the CanGo intranet found in the Report Guide tab under Course Home

Use the financial statements from the most recent year to fill in the table below.

You may find some formulae calling for an average, e.g., average inventory, average receivables.

Because we only have the Balance sheet for one year, you can only use the one year number not an average.

Assume interest expense is \$0.00

Be careful of the Debt equity ratio. The review covers debt asset ratio as an example of how to calculate ratios and that is different from debt equity

and that is different from the debt equity ratio so think about how you calculate the debt equity ratio using the debt asset ratio as an example.

Be sure to cite your references

Ratio

Formula

Detailed

Final number Explanation of why ratio

(express the

calculation

(final result of

is important

ratio in words)

(actual

the detailed

numbers from

calculation)

financial

statements

used for the

calculation) Efficiency Ratio:

Receivables

Turnover Efficiency Ratio:

Inventory

Turnover Net credit

sales/Average

accounts

receivable Cost of goods

sold/Average

inventory 50,000,000/33,0

00,000 Measures the efficiency of

management in the

collection of credit sales

from the customers. The

ratio is important in

formalizing a prudent credit

policy to avoid cash flow

1.5151515152 problems. 9,000,000/32,00

0,000 The ratio helps to evaluate

the rate at which inventory

is converted into sales with

a company. This helps

managers to propery plan

their inventory levels to

avoid high storage costs

associated with

0.28125 merchandise. Financial

Total liabilities/

Leverage Ratio:

Stockholder's

Debt/Equity Ratio equity 94,900,000/141,

000,000 a company uses debt to

finnace its operations. The

ratio is vital in determining

higher risk level and

invetors may demand for

higher returns inresponse

0.6730496454 to the risk. 202220000/37,5

00,000 The ratio is essential in

analyzing a company's

ability topay its short-term

obligations to creditors. It

is often used as a basis for

deciding whether to

avance credit to a

5.3925333333 company. Liquidity Ratio:

Current Ratio Current

assets/Current

liabilities Liquidity Ratio:

Quick Ratio (Cash

+marketable

secuities+Accoun

ts

receivable)/Curre 17,002,000/3750

nt a

0000 Current

Liquidity: Working assets/Current

Capital

liabilities 202,220,000/37,

500,000 Profitability Ratio: Net income/Total 5,486,000/235,9

Return on Assets assets

00,000 Measures the solvency of a

company using the most

liquid assets. It is an

important indicator of a

firm's ability to fulfill shortterm liabilities

0.4533866667 instantaneously. 5.3925333333 Similar to current ratio. Evaluates the amount of

profits generated for each

dollar value of an asset. It

is important as investors

want to now how efficiently

their asset investments are

0.0232556168 utilised to genertae profits. Profitability Ratio: Net income/Net

Return on Sales

sales 5,486,000/50,00

0,000 Indicates the amount of the

revenue from the normal

operations of a company

that is actually converted

into the profits. It is

important to evaluate

efficiency of management

on important decisions

such as pricing and the

0.10972 effect on profit. and that is different from debt equity ratio,

debt asset ratio as an example. 1.515152

94900

94.9

141000 170020

170052 202220000 37500000

202220000

37.5

200.02 170020000

200020000

200220000 141000

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Sep 13, 2020

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