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Financial Metrics Year 1 Year 2 Year 3 Liquidity Ratios - Current Ratio 3.2 3.6 3.9 - Quick Ratio 2.5 2.8 3.2 Profitability Ratios -



  • Financial MetricsYear 1Year 2Year 3
    Liquidity Ratios


    - Current Ratio3.23.63.9
    - Quick Ratio2.52.83.2
    Profitability Ratios


    - Net Profit Margin18%20%22%
    - Return on Assets (ROA)12%14%16%
    Efficiency Ratios


    - Inventory Turnover8 times9 times10 times
    - Accounts Receivable Turnover14 times16 times18 times
    Trend AnalysisIncreasingIncreasingIncreasing
    Financial Statement Analysis


    - Horizontal Analysis


    - Vertical Analysis


    Requirements:

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

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