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Comment on the company's liquidity, activity, debt, profitability, and market ratios from a cross-sectional and time-series viewpoint while highlighting the positive and negative aspects of

  1. Comment on the company's liquidity, activity, debt, profitability, and market ratios from a cross-sectional and time-series viewpoint while highlightingthe positive and negative aspects of the company's financial situation for 2021.
  2. Summariseyour analysis by providing twodetailed recommendations for the company to improve their financial situation

Here is the attached ratio analysis of Pinnacle Inn 2021 and history 2019 and 2020.

Historical and Industry Average Ratios Pinnacle Inn
Industry Average
Ratio 2019 2020 2021 2021
Current ratio 0.85 0.82 0.81 0.85
Quick ratio 0.71 0.69 0.73 0.71
Inventory turnover 12.2 12.5 13.43 12.2
Average collection period (W1) 15 days 17 days 14 15 days
Total asset turnover 1.6 1.9 0.85 1.6
Debt ratio 66% 61% 48% 66%
Times interest earned 2.5 3.5 4.39 2.5
Gross profit margin 37.60% 42.30% 47% 38%
Operating profit margin 3.70% 4.20% 5% 4%
Net profit margin 2.00% 2.30% 2% 2%
Return on investment (w2) 3.00% 3.10% 4% 3.00%
Return on equity 5.60% 4.70% 4% 5.60%
Earnings per share $1.60 $1.70 $1.69 $1.40
Price/earnings ratio 2.4 1.9 1.6 2.4

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