Wgu Fnt1 Task 1 Essay Example
To: Company G CEO
RE: Ratio Analysis-Company G
Company G: Ratios for years 2011 and 2012 compared to industry standards. A. Current Ratio: The ability for a company to pay short term obligations is measured by this ratio. In 2011 Company G moved from 1.86 to 1.77. Compared to the 1.9 Home Center Retail Benchmarks industry ratio, the numbers are below standards. Current Ratio represents values above 2 quartile industry benchmarks data (1.4 to 2.1). Current Ratio represents a weakness for Company G. B. Acid Test Ratio: Determining the volume of short-term assets to cover immediate liabilities without selling inventory is the purpose for the Acid Test Ratio. Numbers below 1 could mean liabilities cannot be paid. A dive from 0.64 to a 0.43, 2011-12 ratios. This is below quartile industry data (1.6/0.9/0.6). Home Center Debt to Worth shows an Industry standard of 1.5. Acid Test Ratio represents weakness for Company G. C. Inventory Turnover: Ratios represented by Inventory Turnover exposes inventory sales and replacements yearly. Sharp decrease from 6.1 to 5.2 holds below average quartile industry data (3.1/2.1/1.4). Company G’s numbers are not encouraging. Industry averages 5.4 according to Home Center Benchmarks. Inventory Turnover represents weakness for Company G. D. Accounts Receivable Turnover: Liquidity of assets measured by Accounts Receivable Turnover. Home Depot ratio in this department is 60.4. Optimal ratios are always higher, and Company G shows a steady decline (32.2—30.4) representing values below industry quartile benchmarks (30%/45%/66%). Ratios representing Company G are below industry average. Accounts Receivable Turnover represents weakness for Company G. E. Days Sales in Receivables: Days needed for collection of account receivables measured by Days Sales in Receivables. Company G incremented time (11.1-12.0) during 2011 to 2012 transition, but still falls behind industry benchmarks (15.1/13.5). Days Sales in Receivables
RE: Ratio Analysis-Company G
Company G: Ratios for years 2011 and 2012 compared to industry standards. A. Current Ratio: The ability for a company to pay short term obligations is measured by this ratio. In 2011 Company G moved from 1.86 to 1.77. Compared to the 1.9 Home Center Retail Benchmarks industry ratio, the numbers are below standards. Current Ratio represents values above 2 quartile industry benchmarks data (1.4 to 2.1). Current Ratio represents a weakness for Company G. B. Acid Test Ratio: Determining the volume of short-term assets to cover immediate liabilities without selling inventory is the purpose for the Acid Test Ratio. Numbers below 1 could mean liabilities cannot be paid. A dive from 0.64 to a 0.43, 2011-12 ratios. This is below quartile industry data (1.6/0.9/0.6). Home Center Debt to Worth shows an Industry standard of 1.5. Acid Test Ratio represents weakness for Company G. C. Inventory Turnover: Ratios represented by Inventory Turnover exposes inventory sales and replacements yearly. Sharp decrease from 6.1 to 5.2 holds below average quartile industry data (3.1/2.1/1.4). Company G’s numbers are not encouraging. Industry averages 5.4 according to Home Center Benchmarks. Inventory Turnover represents weakness for Company G. D. Accounts Receivable Turnover: Liquidity of assets measured by Accounts Receivable Turnover. Home Depot ratio in this department is 60.4. Optimal ratios are always higher, and Company G shows a steady decline (32.2—30.4) representing values below industry quartile benchmarks (30%/45%/66%). Ratios representing Company G are below industry average. Accounts Receivable Turnover represents weakness for Company G. E. Days Sales in Receivables: Days needed for collection of account receivables measured by Days Sales in Receivables. Company G incremented time (11.1-12.0) during 2011 to 2012 transition, but still falls behind industry benchmarks (15.1/13.5). Days Sales in Receivables