ABC Company ratios

Ratio Calculations
		2015		2014		2013
Liquidity Ratios
Current Ratio		0.96945		0.88233		0.84622
Quick Ratio		0.28		0.24		0.22
Activity Ratios
Inventory Turnover		8.11311		8.06035		7.96563
Accounts Recievables Turnover		72.1889		72.1548		72.8291
Total Asset Turnover		2.37798		2.34078		2.35017
Average Collection Period		5.06		5.06		5.01
Financing Ratios
Debt Ratio		0.60043		0.62029		0.67293
Debt-to-Equity Ratio		1.50272		1.63359		2.05741
Times Interest Earned Ratio		10.985		11.4574		15.6145
Market Ratios
Earnings per Share (EPS)		1.1645		1.15493		1.58357
Price Earnings (PE)		8.59		7.79		5.37
Profitability Ratios
Return on Equity (ROE)		20%		20.80%		33.50%
Return on Assets (ROA)		8%		7.90%		11%
Net Profit Margin		3.40%		3.40%		4.70%
Operating Profit Margin		5.60%		5.60%		7.30%

Average Industry

Appendix A
Technology 3-Year Average for Industry Averages
Profitability
Gross Margin	66.15%
Operating Profit Margin	12.04%
Net Profit Margin	6.01%
Earnings per Share	1.49
Management Effectiveness
Return on Equity	12.40%
Return on Assets	5.61%
Return on Investment	14.42
Quick Ratio	2.87
Current Ratio	2.57
Debt-to-Equity	61.01%
Total Debt to Equity	57.08%
Efficiency
Total Asset Turnover	0.55
Inventory Turnover	44.98
Accounts Receivable Turnover	8.21

Perform an overall analysis to explain your recommendation to the CEO. Your analysis should include the following:

• Explain how the company is trending based on the year-over-year ratios.
• Compare the company to the industry average in Appendix A in the Excel workbook in areas of profitability, management effectiveness, and efficiency.
• Based on the above, summarize the pros and cons of ABC Company using both the year-over-year ratio and the industry average
• Provide your final recommendation as to whether or not the CEO should invest in ABC Company.