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1. Discuss the financial strengths and weaknesses of BBCC. Those ratios which use average in calculation, ending total balance has been considered as no information
1. Discuss the financial strengths and weaknesses of BBCC.
Those ratios which use average in calculation, ending total balance has been considered as no information was provided for 2016.
gross profit margin | (gross profit / sales)*100 | |
2017 ($) | 2018 ($) | |
gross proft | 20000 | 22000 |
sales | 40909 | 45000 |
gross profit margin | 48.9% | 48.9% |
On comparing with the industry (50%), it has declined. It has remained stable for both the periods | ||
operating profit margin | (operating profit / sales)*100 | |
2017 ($) | 2018 ($) | |
operating profit | 6182 | 6000 |
sales | 40909 | 45000 |
operating profit margin | 15.1% | 13.3% |
On comparing with the industry (15%), it has remained stable for 2017 but declined for 2018. It's deteriorating in 2018. | ||
net profit margin | (net income / sales)*100 | |
2017 ($) | 2018 ($) | |
net income | 4336 | 4191 |
sales | 40909 | 45000 |
net profit margin | 10.6% | 9.3% |
On comparing with the industry (8%), it is doing better. It's deteriorating in 2018. | ||
return on assets | net income / ending total assets | |
2017 ($) | 2018 ($) | |
net income | 4336 | 4191 |
ending total assets | 30000 | 33620 |
return on assets | 14.5% | 12.5% |
On comparing with the industry (10%), it is doing better. It's deteriorating in 2018. | ||
return on equity | net income / shareholders equity | |
2017 ($) | 2018 ($) | |
net income | 4336 | 4191 |
shareholders equity | 18000 | 20620 |
return on equity | 24.1% | 20.3% |
On comparing with the industry (20%), it is was better in 2017 but remained stable in 2018. It's deteriorating in 2018. | ||
current ratio | current assets / current liabilities | |
2017 ($) | 2018 ($) | |
current assets: | ||
cash | 2000 | 1800 |
accounts receivable | 6000 | 7600 |
inventory | 5000 | 5220 |
total current assets | 13000 | 14620 |
current liabilities: | ||
accounts payable | 2000 | 2600 |
notes payable | 3000 | 3300 |
accrued expenses | 3000 | 3100 |
total current liabilities | 8000 | 9000 |
current ratio | 1.6 | 1.6 |
On comparing with the industry (1.5), it is was better. It remained stable for both the periods. | ||
quick ratio | acid-assets / current liabilities | |
2017 ($) | 2018 ($) | |
acid assets | ||
cash | 2000 | 1800 |
accounts receivable | 6000 | 7600 |
total acid assets | 8000 | 9400 |
total current liabilities | 16000 | 18800 |
quick ratio | 0.5 | 0.5 |
On comparing with the industry (1.5), it is was worse for both the periods. No changes in both the periods | ||
debt to total assets | total debt / total assets | |
2017 ($) | 2018 ($) | |
debt: | ||
notes payable | 3000 | 3300 |
bonds payable | 4000 | 4000 |
total debt | 7000 | 7300 |
ending total assets | 30000 | 33620 |
debt to total assets | 0.2 | 0.2 |
On comparing with the industry (0.5), it was worse for both the periods. No changes in both the periods | ||
times interest earned | EBIT / interest expense | |
2017 ($) | 2018 ($) | |
EBIT | 6182 | 6000 |
interest expenses | 400 | 412 |
times interest earned | 15.5 | 14.6 |
On comparing with the industry (25), it was worse for both the periods. It's deteriorating in 2018. | ||
average collection period | (ending accounts receivable / sales)*365 | |
2017 ($) | 2018 ($) | |
ending accounts receivable | 6000 | 7600 |
sales | 40909 | 45000 |
average collection period | 54 | 62 |
On comparing with the industry (45 days), it was worse for both the periods. It's deteriorating in 2018. | ||
inventory turnover | cost of goods sold / ending inventory | |
2017 ($) | 2018 ($) | |
cost of goods sold | 20909 | 23000 |
ending inventory | 5000 | 5220 |
inventory turnover | 4.2 | 4.4 |
On comparing with the industry (8), it was worse for both the periods. No significant change in 2018. | ||
total assets turnover | sales / ending total assets | |
2017 ($) | 2018 ($) | |
sales | 40909 | 45000 |
ending total assets | 30000 | 33620 |
total assets turnover | 1.4 | 1.3 |
On comparing with the industry (1.6), it was low for both the periods. No significant change in 2018. |
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