Do part of the financial analysis project. Using the correct financial ratios evaluate the company with regard to its short-term liquidity, long-term solvency and profitability. See pages 604 and 605 for which financial ratios should be used to evaluate each category. Your evaluation declare whether Key Tronic is: strong, above average, average, below average, weak, for each short-term liquidity, long-term solvency and profitability. Be sure to mention the financial ratio you are looking at in making this determination and it is great to mention the amount of the financial ratio compared to the industry average. Looking at the trend of Key Tronics financial ratios, be sure to mention if there is any category you believe to serious concern. Included on Moodle, I posted the analysis done by a former student Maddy. I found the layout of her analysis quite helpful. (Hint: you don't need to recount the history of each ratio over the years. Your principal work will be to compare the ratio to the industry average. Look at all the ratios which address that topic before making the evaluation.) C. Financial Analysis (15 points) Provide your assessment of 1) the company's short-term liquidity (2) its long-term solvency (3) the firm's profitability, by using the ratios calculated in relationship to the historic amounts for the ratios and the industry average ratio. In your explanation, be sure to cite the financial ratios calculated for the company compared to its historical averages and the industry average as evidence supporting your conclusions. Note that on some of the financial ratios you will need balance sheet data from 3 years ago (2017), the 2017 balance sheet (actually the balance sheet also contains both 2016 balance sheet numbers) is attached on pages 8 of this document. Industry Average Key Tronic Corporation Financial Ratios for Year Ended June 30, Current Ratio 2019 2018 2017 2.12 Quick Ratio 1.97 2.29 Accounts Receivables Turnover 0.63 0.71 0.84 7.21 6.59 7.37 Average Collection Period 50.61 55.39 49.50 Inventory Turnover 4.08 3.89 4.12 Days' Sales in Inventory 89.56 93.83 88.64 Debt to Equity Ratio 1.08 1.09 1.00 Times-Interest-Earned ratio -2.14 0.44 4.17 Return on Sales -1.72% -0.30% 1.20% Asset Turnover 1.91 1.86 2.00 Return on Assets -3.3% -0.6% 2.4% Return on Equity -6.9% -1.1% Earnings Per Share on Common Stock (Basic) -0.74 -0.12 Price Earnings Ratio -6.73 -62.67 13.42 Dividend Per Share of Common Stock Dividend Yield 0.0% 0.0% 0.0% 2016 2.16 0.75 7.21 50.63 4.49 81.24 1.23 4.60 1.35% 2.08 2.8% 6.3% 0.41 18.02 2015 2.06 0.85 7.09 51.52 5.44 67.06 1.29 4.92 0.99% 2.24 2.2% 4.2% 0.41 26.00 2014 2.36 1.06 6.32 57.77 5.55 65.72 0.51 114.86 2.49% 2.09 5.2% 7.7% 0.72 1.60 1.00 6.30 58.00 7.00 52.00 0.45 8.40 6.00% 1.20 7.20% 11.60% 5.1% 0.52 14.90 0.0% 0.0% 0.0%
