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spin [16.1K]
3 years ago
14

You are the financial analyst at Sew Mart, an arts and crafts retail store. Your boss has asked you to review the company's fina

ncial results for the past three years and to provide an analysis of your findings: Sew Mart Ratios 20x9 20x8 20x7 Sales trend 162 22.1 25.1 Current ratio 0.78 1.90 2.20Acid-test ratio 0.40 1.32 1.90Accounts receivable turnover 41.29 33.20 10.60Inventory turnover 3.58 6.25 7.80Incorporate the following questions into your discussion of the company's financial performance. 1. Has your company performed worse, better, or about the same? 2. Should you be concerned about any ratio noted in your analysis? 3. What recommendations would you share with your boss on the financial health of the company?
Business
1 answer:
mario62 [17]3 years ago
8 0

Answer:

1. It has worsened

2. Yes (refer details below)

3. Refer details below

Explanation:

1. Performance

The performance of the company over the last three years has worsened as indicated by declining sales and decreasing current ratios impacting profitability and liquidity of the company.

2. Concerns

One of the most important concern for the company is its declining sales. It shows that the products are not competitive. Current ratios indicates liquidity crisis since they are decreasing.

3. Recommendations

The company's turnover ratio is high, which may indicates payments are being received timely, and hence the co. should take advantage of that

Low inventory turnover, on the other hand, indicates weaker sales and declining demand for a company’s products which is corroborated by the declining sales trend, the co. must increase its sales, launch new products, advertise aggressively.

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tiny-mole [99]

The return to equity is $75000

Another form of financial ratio is the return on equity. Financial ratios are data taken from a firm's financial statements and used to predict and draw specific conclusions about the organization.

Relative return on equity is a tool used to forecast a company's profitability. It evaluates how effectively people employed in any business have used the money that has been invested.

Since the farm has Nfio of $100,000 and an opportunity cost total of $25,000.

Therefore,

Return on equity -

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= 75,000

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