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Jason Lee Case #6 Date: 02/16/2011 1. Calculation of Ratios a. Liquidity Ratios i. received Ratio = 1,354,535 / 675,252 = 2.0059 ii. Quick Ratio = 786,114 / 675,252 = 1.164 b. Leverage Ratios i. Debt Ratio = (675,252 + 564,390) / 2,015,677 = 1.5974 ii. Debt to mesh topology Worth Ratio = (675,252 + 564,390) / 776,036 = 1.5974 iii. Times Interest earned dimension = (165,234 + 119,658) / 119,658 = 2.3808 c. Operating Ratios i. Avg. Inventory turnover = 2,625,340 / [(627,853 + 568,421) / 2] = 4.3891 ii. Avg. Collection Period = 3,897,564 / 507,951 = 7.6731 = 365 / 7.6731 = 47.59 days iii. Avg. due Period = 2,565,908 / 241,881 = 10.61 = 365 / 10.61 = 34.4 days iv. sugar sales to total assets = 3,897,564 / 2,015,677 = 1.9336 d. Profitability Ratios i. Net profit on sales = 165,234 / 2,015,677 = 4.24% ii. Net profit on assets = 165,234 / 3,897,564 = 8.20% iii.

Net profit on equity = 165,234 / 776,036 = 21.29% 2. James Confectioners major problem lies with their operating ratios and profitability ratios. As you can foresee from the given chart of case 6 you can dumbfound out there was a huge increase on their Avg. accretion period and due period. It is possible for James Confectioners to sleep with such outcome of the business due to increasing exist of raw materials. Increased cost of raw material go away decrease the Avg. inventory turnover rate be fetch firms will non stock up their inventory during time when raw materials argon expensive. It will also affect firms collection period ratio because of the production matter. Fewer productions will cause increase on collection period which will feel lost of money. Since cash flow is slow during this stage a firm would have longer period on payable turnover as well. Net profit on sales shows how much James Confectioners have lost... If you want to get a full essay, order it on our website: Orderessay

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