Inner City
1. Financial Ratios---
• Liquidity Ratio: measure the availability of cash to pay debt.
Current Ratio = Current assets/ Current Liabilities
262,515/ 285,030= 0.92
There is a problem meeting its short term obligations
The best way to improve this ratio and better position the business to cover its short-term obligations is to better manage current liabilities (accounts payables). Generate more profit (cash) out of each sale by increasing profit (as long as it is competitive within the industry), reducing costs of goods sold (making the product with less cost or providing services with less costs) or finding efficiencies throughout the operating cycle.
• Asset Management Ratio: indicate how successfully a company is utilizing its assets to generate revenues.
Inventory Turnover= COGS/ Average inventory
1,428,730/ 18,660= 76.57 Indicate a shortage or inadequate inventory levels, which may lead to a loss in business.
Average days to sell the inventory= 365 days/ inventory turnover ratio
365/ 76.57= 4.8
Measure of the number of times inventory is sold or used in a time period (a year). A low turnover rate might point to overstocking, obsolescence, or deficiencies in the product line or marketing effort. On the other hand, a high turnover rate might indicate inadequate inventory levels, which can lead to a loss in business, as the inventory is too low (stock shortages).
Receivables Turnover= Sales/ Accounts Receivable
1,784,080/ 242,320= 7.36
A low ratio implies the company should re-assess its credit policies in order to ensure the timely collection of imparted credit that is not earning interest for the firm.
Days Receivable= 365/ Receivables Turnover
365/7.36= 49.6= 50
The receivables turnover ratio is used to calculate how well a company is managing their receivables.
Total assets turnover= Net Sales Revenue/ Average Total Assets
1,784,080/ 294,565= 6.06
Measures the efficiency of a Co. use of its assets
• Liquidity Ratio: measure the availability of cash to pay debt.
Current Ratio = Current assets/ Current Liabilities
262,515/ 285,030= 0.92
There is a problem meeting its short term obligations
The best way to improve this ratio and better position the business to cover its short-term obligations is to better manage current liabilities (accounts payables). Generate more profit (cash) out of each sale by increasing profit (as long as it is competitive within the industry), reducing costs of goods sold (making the product with less cost or providing services with less costs) or finding efficiencies throughout the operating cycle.
• Asset Management Ratio: indicate how successfully a company is utilizing its assets to generate revenues.
Inventory Turnover= COGS/ Average inventory
1,428,730/ 18,660= 76.57 Indicate a shortage or inadequate inventory levels, which may lead to a loss in business.
Average days to sell the inventory= 365 days/ inventory turnover ratio
365/ 76.57= 4.8
Measure of the number of times inventory is sold or used in a time period (a year). A low turnover rate might point to overstocking, obsolescence, or deficiencies in the product line or marketing effort. On the other hand, a high turnover rate might indicate inadequate inventory levels, which can lead to a loss in business, as the inventory is too low (stock shortages).
Receivables Turnover= Sales/ Accounts Receivable
1,784,080/ 242,320= 7.36
A low ratio implies the company should re-assess its credit policies in order to ensure the timely collection of imparted credit that is not earning interest for the firm.
Days Receivable= 365/ Receivables Turnover
365/7.36= 49.6= 50
The receivables turnover ratio is used to calculate how well a company is managing their receivables.
Total assets turnover= Net Sales Revenue/ Average Total Assets
1,784,080/ 294,565= 6.06
Measures the efficiency of a Co. use of its assets