XYZ Company sells manufactured goods, on terms of 2/10, net 30. Its financial statements over the last three years are as follows:
2004 |
2005 |
2006 |
|
Rs. |
Rs. |
Rs. |
|
Cash |
30,000 |
20,000 |
5,000 |
Accounts Receivable |
200,000 |
260,000 |
290,000 |
Inventory |
400,000 |
480,000 |
600,000 |
Net fixed assets |
800,000 |
800,000 |
800,000 |
1,430,000 |
1,560,000 |
1,695,000 |
|
Accounts Payable |
230,000 |
300,000 |
380,000 |
Accruals |
200,000 |
210,000 |
225,000 |
Bank Loan, short term |
100,000 |
100,000 |
140,000 |
Long term debt |
300,000 |
300,000 |
300,000 |
Common Stock |
100,000 |
100,000 |
100,000 |
Retained Earnings |
500,000 |
550,000 |
550,000 |
1,430,000 |
1,560,000 |
1,695,000 |
|
Sales |
4,000,000 |
4,300,000 |
3,800,000 |
Cost of goods sold |
3,200,000 |
3,600,000 |
3,300,000 |
Net Profit |
300,000 |
200,000 |
100,000 |
Using the Ratios (calculate ratios and then comments), analyze the company’s financial condition and performance over the last three years. Are their any problem?
Note: Working is required against each ratio not just results:
2004 |
2005 |
2006 |
|
Current Ratio |
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Acid Test Ratio |
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Average collection period |
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Inventory turnover |
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Total debt/equity |
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Long-term debt/total capitalization |
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Gross profit margin |
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Net profit margin |
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Total asset turnover |
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Return on assets |
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