Explain how the company is trending based on the year-over-year ratios. Compare the company to the industry average in Appendix A in the Excel workbook in areas of profitability, management effectiveness, and efficiency. Based on the above, summarize the pros and cons of ABC Company using both the year-over-year ratio analysis from Part 1 and the industry average comparisons from Part 3. Provide the teams final recommendation as to whether or not the CEO should invest in ABC Company.

B C D E G . 2015 2014 2013 Formula Used (Write out formulas) 96.95% 93.53% 88.23% 23.54% 84.62% 87.79% current ratio = current assets/current liabilities quick ratio(ACID) = current assets +inventory/current liabiliti 8.08768082 71.65 7.67 5.09 7.98227741 71.33 7.78 5.1 7.96562777 72.82 7.98 5.01 IT = COGS/Inventory ART = Annual credit sales/accounts rec. TAT = sales/total assets ACP = accounts rec./annual credit sales/365 days 60.04% 1.5 10.98 62.03% 1.63 11.45 67.29% 2.05 15.61 1 Ratio Calculations 2 3 Liquidity Ratios 4 Current Ratio 5 Quick Ratio 6 7 Activity Ratios 8 Inventory Turnover 9 Accounts Recievables Turnover 10 Total Asset Turnover 11 Average Collection Period 12 13 Financing Ratios 14 Debt Ratio 15 Debt-to-Equity Ratio 16 Times Interest Earned Ratio 17 18 Market Ratios 19 Earnings per Share (EPS) 20 Price Earnings (PE) 21 22 Profitability Ratios 23 Return on Equity (ROE) 24 Return on Assets (ROA) 25 Net Profit Margin 26 Operating Profit Margin 27 28 29 30 31 32 debt ratio = total debt/total assets D-toE ratio = total liabilities/total shareholders equity TIER = net operating income or EBIT/interest expense 1.16 $8.62 1.15 $7.83 1.58 $5.38 EPS = net income/ outstanding shares PE = market price per share/earnings per share $0.34 $0.11 $0.20 $0.08 3.36% $0.05 $0.21 $0.08 3.39% $0.05 ROE = net income/common equity ROA = net operating income or EBIT/total assets Net profit margin = Net income/sales Operating profit margin = Net operating income or EBIT/sa 4.67% $0.07 Income Statement-Balance Sheet Ratio Calculations Appendix A Finance Department ABC's Debt Ratio shows a steady decrease over the three-year term, in 2015 it was at.60 or 60.04%. "A lower debt ratio usually implies a more stable business with the potential of longevity because a company with lower ratio also has lower overall debt." (MyAccountCourse, 2021) Are we able to continue this decreasing trend and negotiate a better interest rate with the creditors, is there a good relationship? Is the current credit and collections policy acceptable or should we restructure the agreement? "Where there are cash needs beyond the day to day working capital." (Smith, 2021) Most importantly what is the position of stockholders? Sales Department "A company's product or service is directly linked to the sales department." (Harris, 2021) How is the relationship with customers, can the customer's unique needs be identified and follow up completed? When looking at ROE, ROA, and Operating Profit Margins, what has caused the decrease over the three years and how can this be reversed? Are salespeople knowledgeable about products, is there training provided to the department? "The sales department is vital to every company and requires that it coordinates sales operations and implements sales techniques for sales targets." (Harris, 2021) What are the goals and are they reasonable? Is feedback from customers getting relayed to marketing and are sales and marketing working together? Marketing Department "The Marketing Department is the key to good marketing and sales. It promotes and establishes a business in its niche, based on the products or services the business is offering. It identifies the areas in which the product fits and where the business should focus its marketing strategy and, therefore, spend its budget for the maximum coverage and results." (Singh, 2021) What audience is the focal point, B2B or B2C environment and are the products a good fit? Is the target market appealing to all ages? "Monitoring vendor performance and maintaining the relationships is a critical job role. Vendors must prove their performance, deliver on contracts and communicate with the marketing employee." (Lazari, 2018) Where and how much advertisement are being done with vendors, is the relationship good, and what is the cost? Human Resources The human resources department is there to provide support to the company. If anyone is in need of time off, organizational structure, policies and procedures of the company they would contact the human resources department. This department would need to contribute to the operating profit margin. When evaluating compensation plans and performance appraisals it is important for the human resource department to know what the financial state ABC is in. Human resources affects, and is affected by, the "bottom line." (Shrm, 2021). The bottom line in finance is the net profit of a business. Based on ABC's debt ratio, they have declined in profit over the last three years. This would mean that the human resource department would have to possibly begin cutting in some areas such as raises and bonuses based on the lack of profit. How can human resources help improve company performance to increase net profits? Legal Donartmont B C D E G . 2015 2014 2013 Formula Used (Write out formulas) 96.95% 93.53% 88.23% 23.54% 84.62% 87.79% current ratio = current assets/current liabilities quick ratio(ACID) = current assets +inventory/current liabiliti 8.08768082 71.65 7.67 5.09 7.98227741 71.33 7.78 5.1 7.96562777 72.82 7.98 5.01 IT = COGS/Inventory ART = Annual credit sales/accounts rec. TAT = sales/total assets ACP = accounts rec./annual credit sales/365 days 60.04% 1.5 10.98 62.03% 1.63 11.45 67.29% 2.05 15.61 1 Ratio Calculations 2 3 Liquidity Ratios 4 Current Ratio 5 Quick Ratio 6 7 Activity Ratios 8 Inventory Turnover 9 Accounts Recievables Turnover 10 Total Asset Turnover 11 Average Collection Period 12 13 Financing Ratios 14 Debt Ratio 15 Debt-to-Equity Ratio 16 Times Interest Earned Ratio 17 18 Market Ratios 19 Earnings per Share (EPS) 20 Price Earnings (PE) 21 22 Profitability Ratios 23 Return on Equity (ROE) 24 Return on Assets (ROA) 25 Net Profit Margin 26 Operating Profit Margin 27 28 29 30 31 32 debt ratio = total debt/total assets D-toE ratio = total liabilities/total shareholders equity TIER = net operating income or EBIT/interest expense 1.16 $8.62 1.15 $7.83 1.58 $5.38 EPS = net income/ outstanding shares PE = market price per share/earnings per share $0.34 $0.11 $0.20 $0.08 3.36% $0.05 $0.21 $0.08 3.39% $0.05 ROE = net income/common equity ROA = net operating income or EBIT/total assets Net profit margin = Net income/sales Operating profit margin = Net operating income or EBIT/sa 4.67% $0.07 Income Statement-Balance Sheet Ratio Calculations Appendix A Finance Department ABC's Debt Ratio shows a steady decrease over the three-year term, in 2015 it was at.60 or 60.04%. "A lower debt ratio usually implies a more stable business with the potential of longevity because a company with lower ratio also has lower overall debt." (MyAccountCourse, 2021) Are we able to continue this decreasing trend and negotiate a better interest rate with the creditors, is there a good relationship? Is the current credit and collections policy acceptable or should we restructure the agreement? "Where there are cash needs beyond the day to day working capital." (Smith, 2021) Most importantly what is the position of stockholders? Sales Department "A company's product or service is directly linked to the sales department." (Harris, 2021) How is the relationship with customers, can the customer's unique needs be identified and follow up completed? When looking at ROE, ROA, and Operating Profit Margins, what has caused the decrease over the three years and how can this be reversed? Are salespeople knowledgeable about products, is there training provided to the department? "The sales department is vital to every company and requires that it coordinates sales operations and implements sales techniques for sales targets." (Harris, 2021) What are the goals and are they reasonable? Is feedback from customers getting relayed to marketing and are sales and marketing working together? Marketing Department "The Marketing Department is the key to good marketing and sales. It promotes and establishes a business in its niche, based on the products or services the business is offering. It identifies the areas in which the product fits and where the business should focus its marketing strategy and, therefore, spend its budget for the maximum coverage and results." (Singh, 2021) What audience is the focal point, B2B or B2C environment and are the products a good fit? Is the target market appealing to all ages? "Monitoring vendor performance and maintaining the relationships is a critical job role. Vendors must prove their performance, deliver on contracts and communicate with the marketing employee." (Lazari, 2018) Where and how much advertisement are being done with vendors, is the relationship good, and what is the cost? Human Resources The human resources department is there to provide support to the company. If anyone is in need of time off, organizational structure, policies and procedures of the company they would contact the human resources department. This department would need to contribute to the operating profit margin. When evaluating compensation plans and performance appraisals it is important for the human resource department to know what the financial state ABC is in. Human resources affects, and is affected by, the "bottom line." (Shrm, 2021). The bottom line in finance is the net profit of a business. Based on ABC's debt ratio, they have declined in profit over the last three years. This would mean that the human resource department would have to possibly begin cutting in some areas such as raises and bonuses based on the lack of profit. How can human resources help improve company performance to increase net profits? Legal Donartmont