Week your five Ratio Research Memo
To: CEO-Kudler Foods.
From: Team B
Time: August twenty-two, 2011
This memo is within regard into a recent horizontally and straight analysis performed on Kudler Foods. The analysis finished was to advise the company of potential passions from diverse users. The users will be able to make use of ratios calculated to reveal efficiency and the current position in the company. The vertical and horizontal evaluation is fastened along with calculations of liquidity, success, and solvency ratios.
The fluidity, profitability, and solvency proportions allow users to identify the financial well being of Kudler Foods. The liquidity ratios include the current ratio, acid-test ratio, and inventory turnover. Kudler Gourmet has no accounts receivables so there was no need for a receivables turnover calculations. The fluid ratios demonstrate that the sum of investment funds available is high in assessment to the industry average. Therefore Kudler Food has possessions that can be converted to cash right away. Creditors would look at these calculations and be appeased by the ability Kudler Foods needs to pay their short-term debts. The profitability ratios calculations included asset turnover, profit margin, return in assets, and return in common stock-holder equity. The ratios determined show by use of earnings ratios the organization financial position is worrisome. This is said because ROA is usually low. Once ROA can be low then your company is definitely using less money on even more investment. The money margin is definitely low as well calculated at only. 6% demonstrating that Kudler Foods has a low revenue at the reporting time. The solvency ratio was worked out as well. Your debt to total assets ratio was. 28%, which will shows the organization is healthy and balanced. The times interest earned were 9. 8%, which backs up claims of financial health. The solvency percentage shows Kudler Foods pays back long term obligations.
Every single ratio offers different users interest in head. The profitability percentage will be a application for supervision to determine overall performance. Lower percentages will cause administration to examine market and finds a solution to further improve. Probability ratios will also identify the company ability to survive during ups and downs. Liquidity ratios to be used by credit card companies to ensure a business can turn short-term assets to cash to cover debt. The liquidity of Kudler Food will be essential for the lender, such as a lender, to ensure basic safety of a financial loan. The solvency ratio to be used by investors to determine the capacity to meet long term obligations. The investor are able to use data to ensure debt obligations are achieved and to determine if the company is financially healthy. The solvency proportion will also be capable of determine the expansion potential upon shares.
The collected data shows the performance and situation of the business. With horizontal and up and down analysis and ratio computations the efficiency and location of the firm is determined. The performance can be satisfactory, although shareholders might want to come up with a intend to improve calculations to ensure reliability of any kind of obstetrical. The existing calculations may be due to an economic decline. The current position from the company can be financially healthful, but not enough profitability. Kudler Foods can be paying debt as developed, but restrictions profitability, which will puts a hardship in potential growth in the near future. Thank You,
Kudler Fine Foods Vertical Analysis
Balance Sheet by 12/31/2003
Current Assets| |
Cash| $1, 430, 000 (1, 430, 000/2, 675, 250)| 53. 5%
Accounts Receivable| $86, 1000 (86, 000/2, 675, 250)| 3. 2%| Merchandise Inventory| $429, 1000 (429, 000/2, 675, 250)| 16%| Prepay Expenses| $26, 000 (26, 000/2, 675, 250)|. 009%| Notes Receivable| $0 (0/2, 675, 250)| 0%
Total Current Assets| 1, 971, 000 (1, 971, 000/2, 675, 250)| 73. 7%
Fixed Assets| |
Vehicles| $35, 250 (35, 250/2, 675, 250)| 1%
Furniture and Fixtures...