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Sales
Cost of Goods Sold
23,949.00
22,562.00
5.8%
1,009.00
23,949.00
4.2%
716.00
23,949.00
3.0%
716.00
16,540.00
4.3%
716.00
6,005.00
11.9%
716.00
269.93
$0.38
4,369.00
6,765.00
2,396.00
4,369.00
6,765.00
0.65
QUICK RATIO
Current Assets
Inventory
Current Liabilities
Prepared by:
4,369.00
1,005.00
6,765.00
0.50
Prepared on:
Current Ratio
The current ratio compares a company's current assets (those that can be converted to cash during the
current accounting period) to its current liabilities (those liabilities coming due during the same period).
The usual formula is:
Current Ratio = Current Assets / Current Liabilities
The current ratio measures the company's ability to repay the principal amounts of its liabilities.
The current ratio is closely related to the concept of working capital. Working capital is the difference
between current assets and current liabilities.
Is a high current ratio good or bad? Certainly, from the creditor's standpoint, a high current ratio means
that the company is well-placed to pay back its loans. Consider, though, the nature of the current assets:
they consist mainly of cash and cash equivalents. Funds invested in these types of assets do not
contribute strongly and actively to the creation of income. Therefore, from the standpoint of stockholders
and management, a current ratio that is very high means that the company's assets are not being used
to best advantage.
Leverage Ratios
Debt ratio
Total Liabilities
Total Assets
Debt ratio
2014
10,535.00
16,540.00
0.64
Debt Ratio
The debt ratio is defined by this formula:
Debt ratio = Total debt / Total assets
It is a healthy sign when a company's debt ratio is falls, although both stockholders and potential
creditors would prefer to see the rate of decline in the debt ratio more closely match the decline in return
on assets. As the return on assets falls, the net income available to make payments on debt also falls.
This company should probably take action to retire some of its short-term debt, and the current portion of
its long-term debt, as soon as possible.
Profitability Ratios
Return on Assets
EBITDA
Total assets
Return on assets
Full Year
$943
$16,540
5.7%
Return on Assets
One of management's most important responsibilities is to bring about a profit by effective use of the
resources it has at hand. One ratio that speaks to this question is return on assets. There are several
ways to measure this return; one useful method is:
Return on Assets = (Gross Profit - Operating Expense) / Total Assets
This formula will return the percentage earnings for a company in terms of its total assets. The better the
job that management does in managing its assets-the resources available to it-to bring about profits, the
greater this percentage will be.
It's normal to calculate the return on total assets on an annual basis, rather than on a quarterly basis.
Profitability Ratios
Profitability Ratios