Running head:Integrative case analysis 1

Calculation of ratios for the year 2012:

1)Current Ratio = Current Assets/Current Liabilities

= 4200/2210

= 1.9

2)Quick Ratio = Quick Assets/Current Liabilities

= 2523/2210

= 1.14

3)Operating Cash Flow to Current Liabilities Ratio

= 1365+581+61-61+24 / 2210

=0.90

4)Days Account Receivables Outstanding

= Account Receivables / Credit Sales 365

= 486 / 2765 365

= 64.16 Days

5)Days Inventory held

= Average Inventory / Annual Sales 365

= [(1242 + 966) / 2 ] / 5813 365

= 69.32 Days

6)Days Account Payables Outstanding

= 365 / Annual Purchases Average Account Payables

Calculation of Annual Purchases

= 5813 +1242 -966 = 6089

Calculation of Average Account Payables

= (398 + 540) / 2

= 469

Therefore Days Account Payables Outstanding

Running head:Integrative case analysis 2

= 365 /6089

= 28.11 Days

7)No. of days of working capital finance needed

= Average working capital / Annual Sales 365

= (4200 2210) / 13300 365

= 54.61 Days

8)Liabilities to Asset Ratio

= 3105 / 8219

= 0.38

9)Liabilities to Equity Ratio

= 3105 / 5109

= 0.61

10)Long term Debt to Equity Ratio

= 550 / 5109

= 0.11

11)Interest Coverage Ratio

= Operating Income / Interest

= 1997 / 33

= 60.51

12)Operating Cash flows to Total Liabilities

= 1990 / 3105

=0.64

Short term solvency

From the above calculations,it is clear that there is is a increase in short term solvency risk, the
current ratio of the company fell below 1.0 and the quick ratio will be above 3.0 in 2008. both these
ratios have decreased in the three year period of time. The same downward trend is noticed in
operating cash flow to current liabilities. Similarly, the days of accounts payables has decreased which
Running head:Integrative case analysis 3

may be a reason for the decrease in the cash balance. There is a considerable decrease in the
marketable securities which is declining the short term liquidity.

Long term solvency

The total liabilities have also increased during the given three year period of time and also the long
term debt ratio has also increased. There is increase in the current liabilities. There is a drastic
decrease in the interest coverage ratio and operating cash flow to total liabilities ratio. They are still in
the healthy level, company started to carry the long term debt in 2007. these debt do not include
those amount pertains to the operating leases. If these expenses are included the long term debt will
increase further.

Manipulation Risk

The Earning model discloses a less probability of manipulation in the earnings. Irrespective of
decrease in the net income both assets and sales are growing.