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Financial Metrics Year 1 Year 2 Year 3 Liquidity Ratios - Current Ratio 3.5 3.8 4.0 - Quick Ratio 2.8 3.0 3.2 Profitability Ratios -



  • Financial MetricsYear 1Year 2Year 3
    Liquidity Ratios


    - Current Ratio3.53.84.0
    - Quick Ratio2.83.03.2
    Profitability Ratios


    - Operating Profit Margin25%28%30%
    - Return on Equity (ROE)20%22%24%
    Efficiency Ratios


    - Inventory Turnover7 times8 times9 times
    - Accounts Payable Turnover12 times14 times16 times
    Financial Statement Analysis


    - Horizontal Analysis


    - Vertical Analysis


    Requirements:

    1. Compute liquidity ratios (current ratio, quick ratio) for Company STU for three consecutive years.
    2. Determine profitability ratios (operating profit margin, return on equity) for the same period.
    3. Analyze efficiency ratios (inventory turnover, accounts payable turnover) for each year.
    4. Perform horizontal analysis of financial statements.
    5. Conduct vertical analysis of financial statements.
    6. Ensure all ratios are correctly calculated.
    7. Provide interpretations for the trends observed.
    8. Present all data accurately.

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