andryk) x + V /local/Packages/Microsoft.MicrosoftEdge_wekyb3d8bbwe/TempState/Downloads/Case%20Study%203%20(Mand - + Fit to page Page View A Read Tigger's Questions ng Capital Management 1. What does the current ratio and quick ratio indicate with respect to my liquidity position in the current year and the prior year? [6 marks] 2. The majority of my sales revenue are cash sales. However, I do have a number of customers who have applied for credit which I have granted. Are my credit customers adhering to my credit policy of Net 30 days? How could I improve collectability on accounts receivable and minimize the risk of bad debts? [6 marks] 3. My inventory consists of food & beverages which are sold in the clubhouse restaurant as well as items that we carry in the golf shop (such as shoes, golf clubs, golf bags, and apparel that are available to the public for purchase). What does the decline in my inventory turnover indicate? (Hint: Calculate any related ratio not listed in Tigger's table that may help analyze the situation and explain the business issues that should be brought to Tigger's attention.) (6 marks) 4. The purchases of inventory are made on a net 30-day credit basis from the majority of my suppliers. On average, is TWE Enterprises adhering to the net 30-day credit policies established by our suppliers? Are we paying faster or slower relative to last year? (Hint: Calculate any related ratio not listed in Tigger's table that may help analyze the situation and explain the business issues that should be brought to Tigger's attention. You may also want to consider the cash-to-cash [4 marks] cycle.) the nastaven nalysis of Profitability 5. What does the case marain and cofit margin tollenhout.manentions A HEWLETT-PACKARD + ce Study 3 (Mandryk) x Chan/AppData/local/Packages/Microsoft MicrosoftEdge_wekyb3d8bbwe/TempState/Downloads/Case20Study 20320/Mandry D Page view A Read aloud - + Pit to page Q TWE Enterprises Limited (a golf course operation) has been in business for a number of years now. In an effort to see how the company is doing. Tigger Weeds has asked for your help in interpreting some financial statement ratios. Tigger has been able to calculate the ratios, but is unclear on how to interpret them. Tigger's objective is to Identify strengths as well as weaknesses in the company's financial position, and its overall ability to generate profits and cash flow. A summary of Tigger's ratio calculations appears below: Ratio TWE Enterprises Limited Current Year Prior Year 1.85 2.10 0.92 105 9.89 13.14 29 129 55% 4996 2.49 4.95 42 45 Current Ratio Quick Ratio Inventory Turnover Days Sales Uncollected Accounts Payable Turnover Debt Ratio Times Interest Earned Gross Margin Ratio Profit Margin Ratio 11.4 399 996 5% Case Requirements wid Prepare a written report that addresses Tieger's questions using the headings in bold below. The responses 0 BIG HEWLETT-PACKARD Study 3 (Mandryk) x + V n/AppData/local/Packages/Microsoft MicrosoftEdge_Bwekyb3dbbwe/TempState/Downloads/Case%20Study 203.200 and 2 -- + Fit to page Page View All read aloud [4 marks cycle.) Analysis of Profitability 5. What does the gross margin and profit margin tell me about my operations over the past year? What reasons could explain the changes in these ratios? Are there any issues I should look into to improve TWE's operations? [6 marks) Analysis of Solvency & Capital Structure 6. How are the assets of TWE Enterprises mainly financed? Are we relying more or less on debt financing now relative to last year? Discuss any issues you see as a result of analyzing the ratios related to TWE's capital structure. [4 marks 7. Is Income sufficient to support the interest payments on debt financing? How has this ratio changed relative to last year? (Has it improved? Or gotten worse?) Explain how these ratios relate to risk. (Hint: You may wish to tle in your analysis of the profitability ratios in this section to assess TWE's ability to make interest & debt repayments). [4 marks) CHEWLETT-PACKARD andryk) x + V /local/Packages/Microsoft.MicrosoftEdge_wekyb3d8bbwe/TempState/Downloads/Case%20Study%203%20(Mand - + Fit to page Page View A Read Tigger's Questions ng Capital Management 1. What does the current ratio and quick ratio indicate with respect to my liquidity position in the current year and the prior year? [6 marks] 2. The majority of my sales revenue are cash sales. However, I do have a number of customers who have applied for credit which I have granted. Are my credit customers adhering to my credit policy of Net 30 days? How could I improve collectability on accounts receivable and minimize the risk of bad debts? [6 marks] 3. My inventory consists of food & beverages which are sold in the clubhouse restaurant as well as items that we carry in the golf shop (such as shoes, golf clubs, golf bags, and apparel that are available to the public for purchase). What does the decline in my inventory turnover indicate? (Hint: Calculate any related ratio not listed in Tigger's table that may help analyze the situation and explain the business issues that should be brought to Tigger's attention.) (6 marks) 4. The purchases of inventory are made on a net 30-day credit basis from the majority of my suppliers. On average, is TWE Enterprises adhering to the net 30-day credit policies established by our suppliers? Are we paying faster or slower relative to last year? (Hint: Calculate any related ratio not listed in Tigger's table that may help analyze the situation and explain the business issues that should be brought to Tigger's attention. You may also want to consider the cash-to-cash [4 marks] cycle.) the nastaven nalysis of Profitability 5. What does the case marain and cofit margin tollenhout.manentions A HEWLETT-PACKARD + ce Study 3 (Mandryk) x Chan/AppData/local/Packages/Microsoft MicrosoftEdge_wekyb3d8bbwe/TempState/Downloads/Case20Study 20320/Mandry D Page view A Read aloud - + Pit to page Q TWE Enterprises Limited (a golf course operation) has been in business for a number of years now. In an effort to see how the company is doing. Tigger Weeds has asked for your help in interpreting some financial statement ratios. Tigger has been able to calculate the ratios, but is unclear on how to interpret them. Tigger's objective is to Identify strengths as well as weaknesses in the company's financial position, and its overall ability to generate profits and cash flow. A summary of Tigger's ratio calculations appears below: Ratio TWE Enterprises Limited Current Year Prior Year 1.85 2.10 0.92 105 9.89 13.14 29 129 55% 4996 2.49 4.95 42 45 Current Ratio Quick Ratio Inventory Turnover Days Sales Uncollected Accounts Payable Turnover Debt Ratio Times Interest Earned Gross Margin Ratio Profit Margin Ratio 11.4 399 996 5% Case Requirements wid Prepare a written report that addresses Tieger's questions using the headings in bold below. The responses 0 BIG HEWLETT-PACKARD Study 3 (Mandryk) x + V n/AppData/local/Packages/Microsoft MicrosoftEdge_Bwekyb3dbbwe/TempState/Downloads/Case%20Study 203.200 and 2 -- + Fit to page Page View All read aloud [4 marks cycle.) Analysis of Profitability 5. What does the gross margin and profit margin tell me about my operations over the past year? What reasons could explain the changes in these ratios? Are there any issues I should look into to improve TWE's operations? [6 marks) Analysis of Solvency & Capital Structure 6. How are the assets of TWE Enterprises mainly financed? Are we relying more or less on debt financing now relative to last year? Discuss any issues you see as a result of analyzing the ratios related to TWE's capital structure. [4 marks 7. Is Income sufficient to support the interest payments on debt financing? How has this ratio changed relative to last year? (Has it improved? Or gotten worse?) Explain how these ratios relate to risk. (Hint: You may wish to tle in your analysis of the profitability ratios in this section to assess TWE's ability to make interest & debt repayments). [4 marks) CHEWLETT-PACKARD