act as a consultant hired by the operations director of the Barry Computer Company provide a financial
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Question:
act as a consultant hired by the operations director of the Barry Computer Company provide a financial analysis and comparison to the industry. You will conduct a financial ratio analysis to gain a good understanding of the company's financial performance and will then write up an evaluation of the organization's financial health, as well as your recommendations for how specific ratios can be improved within the next 3-5 years.
Submityour assessment of a company's financial performance, to include the Recommendations.
- Foreach ratiothat negatively falls outside the industry standards, develop at least one appropriate recommendation for the Barry Computer Company to improve financial performance over time (over the next 3-5 years tomeet industry standards).
- Assess limitations of the exclusive use of ratio analysis for evaluating financial performance. In your assessment, describe any qualitative factors that could also complement the ratio analysis and play an important role in improving financial performance.
- Calculate the following ratios for the Barry Computer Company using the Excel spreadsheet
Ratio | Calculation |
Current | Current Assets/Current Liabilities |
Quick | Current Assets - Inventories/Current Liabilities |
Days Sales Outstanding | Receivables/(Annual Sales/365) |
Inventory Turnover | Sales/Inventories |
Total Assets Turnover | Sales/Total Assets |
Profit Margin | Net Income/Sales |
ROA | Net Income/Total Assets |
ROE | Net Income/Common Equity |
ROIC | EBIT(1 - T)/Total Invested Capital |
TIE | EBIT/Interest Charges |
Debt/Total Capital | Total Debt/(Total Debt + Equity) |
M/B | Market Price/Book Value |
P/E | Price per Share/Earnings per Share |
EV/EBITDA | (Market Value of Equity + Market Value of Total Debt + Market Value of Other Financial Claims - Cash and Equivalents)/EBITDA |
- Analyze computations to determine which ratios are above and below their industry averages, and for each, provide a brief explanation as to why that might be the case.
- Evaluate the financial health of the organization, including in what areas the organization could improve.
Reference:
Related Book For
Data Analysis and Decision Making
ISBN: 978-0538476126
4th edition
Authors: Christian Albright, Wayne Winston, Christopher Zappe
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