Evaluation of Company's Financial Position and Ratios

Accounting

FINANCE
1
Question 1:
A.
1. Earning power of the company has been evaluated with the help of Profitability Ratio.
2. Debt to Assets Ratio helps the organization to measure the financial acquisition of assets.
3. Account Receivable Ratio states the ability of the firm to collect the amount from debtors in
short or long period.
4. Interest coverage ratio defines the competence of the company to recover the amount of
interest.
5. Inventory Turnover Ratio states the time that is taken by the company to sell its inventories in
the market.
B.
Ratio's 2018
Profitability Ratio
Gross Margin Gross Profit 157500
Net Sales 850500 18.52%
Net Profit Net Profit 94500
Net Sales 850500 11.11%
Return on Equity Net Income 94,500

FINANCE
2
Average Shareholders’ Equity 401310 0.24
Efficiency Ratio
Inventory Turnover
ratio Cost of goods sold 56700
Average inventory 236250 0.24
Total Assets Turnover Net sales 850500
Average Total Assets 782775 1.09
Account Receivables Sales 850500
Average Account Receivable 284500 2.99
Interest Coverage
Ratio EBIT 157500
Interest Expenses 6300 25
Liquidity Position
Current Ratio Current Assets 570150
Current Liabilities 312480 1.82
Quick Ratio
Current Assets (Account Receivables
+cash) 318150
Current Liabilities 312480 1.02