Marine supply case study
TO
: Professor E. Sherman, Northeastern University
FROM
:
Abdulrahman AlGhubain, Li Huang,
Hoi Tung Li (Wallace), NEU Consultants
DATE
: May 13, 2013
SUBJECT
: Analysis of Marine Supply Financial Ratios and Suggestions for Improvements Thank you for allowing us the opportunity to work with your company. As requested, we have evaluated your company’s performance based on the existing financial results. Our analysis is based on financial ratios calculated from your provided financial statements.
a. Liquidity
According to the current ratio, it indicates that the company is still doing well in comparison to the industry average. However, the liquidity is decreasing annually, which means the company needs to keep a better track of their current assets and current liabilities. Furthermore, the inventory to working capital percentage is fluctuated due to poor inventory management skills
.
This is reflected negatively in year 3
,
which indicates poor quality of liquidity. As a solution,
M
arine
S
upply should keep a better track of the ir inventories in order to improve the inventory turnover and to decrease the percentage of inventory to working capital.
On the other hand, the receivables to working capital is increasing over time and is currently higher than the industry average which will result in collateral problems
; attention from the company is needed for the receivables collection.
b. Financial Risk
Marine
S upply needs to focus on financial risks. After calculating the financial ratios, we discovered that some numbers indicate that the company will face several problem s in the next few years. For instance, analyzing the debt to asset ratio
,
we found that it i s much higher than the industry average. Particularly, we can see that the account s payable is three times great er now than in year 1. As a result, we can tell the company has a
lack
: Professor E. Sherman, Northeastern University
FROM
:
Abdulrahman AlGhubain, Li Huang,
Hoi Tung Li (Wallace), NEU Consultants
DATE
: May 13, 2013
SUBJECT
: Analysis of Marine Supply Financial Ratios and Suggestions for Improvements Thank you for allowing us the opportunity to work with your company. As requested, we have evaluated your company’s performance based on the existing financial results. Our analysis is based on financial ratios calculated from your provided financial statements.
a. Liquidity
According to the current ratio, it indicates that the company is still doing well in comparison to the industry average. However, the liquidity is decreasing annually, which means the company needs to keep a better track of their current assets and current liabilities. Furthermore, the inventory to working capital percentage is fluctuated due to poor inventory management skills
.
This is reflected negatively in year 3
,
which indicates poor quality of liquidity. As a solution,
M
arine
S
upply should keep a better track of the ir inventories in order to improve the inventory turnover and to decrease the percentage of inventory to working capital.
On the other hand, the receivables to working capital is increasing over time and is currently higher than the industry average which will result in collateral problems
; attention from the company is needed for the receivables collection.
b. Financial Risk
Marine
S upply needs to focus on financial risks. After calculating the financial ratios, we discovered that some numbers indicate that the company will face several problem s in the next few years. For instance, analyzing the debt to asset ratio
,
we found that it i s much higher than the industry average. Particularly, we can see that the account s payable is three times great er now than in year 1. As a result, we can tell the company has a
lack