Comparatives Industry

Financial Ratios Current year Previous year Historical average

Current ratio (x) 1.91 2.11 1.50

Quick ratio (x) 0.95 1.05 0.90

Days of sales outstanding (days) 18.70 18.90 18.00

Inventory turnover (x) 9.68 9.48 12.00

Total asset turnover (x) 1.94 1.94 2.4

Working capital turnover (x) 13.56 12.35 11.80

Gross profit margin (%) 25% 26.98% 29.30%

Net Profit margin (%) 6.25% 6.66% 6.5%

Return on total capital (%) 19.55% 15.07% 22.4%

Return on common equity (%) 19.61% 28.51% 19.8%

Debt-to- equity (%) 101.96% 120.45% 35.7%

Interest coverage (x) 7 5.81 9.20

(b) Discuss how these ratios compare with the company's performance last year.

(c) Discuss how each of the company's five (5) main groups of ratios (liquidity, asset

efficiency, profitability, return and solvency) compare with the industry's performance.

(d) Deconstruct Clear Water's current year Return on Equity into its three (3) components, using Dupont analysis. Compare the result with the ones of the previous year.