Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

A few years ago, I decided to expand my coffee shop business and bought a coffee roaster. I created my own brand, Americas famous ,

A few years ago, I decided to expand my coffee shop business and bought a coffee roaster. I created my own brand, Americas famous, and started selling vacuum-packed coffee in local supermarkets. It was a huge success! Sales of my vacuum-packed coffee skyrocket and soon become the item most sold in my company. To be honest, I have concentrated on sales and no other items in the income statement or balance sheet. A finance intern from Kean University prepared the Table below. I am a little embarrassed to confess that I dont know what most of the ratios mean. However, I noticed that some of the ratios are below the industry median, and I am anxious. Should I be worried? Is my business on the edge of being broke? What can you say about the financial performance of The Americas famous Co? Do you have any suggestions?

The Americas famous Co. Industry Median
Current ratio 0.74 1.43
Quick ratio 0.39 0.35
Cash ratio 0.15 0.21
Total asset turnover 2.01 0.85
Inventory turnover 27.96 6.15
Receivables turnover 54.91 9.82
Total debt ratio 0.43 0.52
Debt-equity ratio 0.74 1.08
Equity multiplier 1.74 2.08
Times interest earned 5.26 8.06
Cash coverage ratio 8.12 9.41
Profit margin 5.01% 5.10%
Return on assets 10.08% 9.53%
Return on equity 17.59% 15.14%

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Forecasting Principles And Practice

Authors: Rob J Hyndman, George Athanasopoulos

1st Edition

0987507109, 978-0987507105

More Books

Students also viewed these Finance questions