Question
For this weeks assignment you are tasked with performing a financial ratio analysis of a small bakery. Based on the financial statement below, calculate the
For this weeks assignment you are tasked with performing a financial ratio analysis of a small bakery.
Based on the financial statement below, calculate the following for 2018 and 2019:
- Profit Margin
- Return on owners capital
- Current Ratio
- Quick Ratio
- Inventory Turnover
The following information relates to the business of Colossus Bakery, and the owner is concerned about the profitability and financial structure of her business as of 12/31/2019, especially since the bank requires repayment of the businesss overdraft of $25,375.
12/31/2019
12/31/2018
Revenue (sales on credit)
$120,000
$95,000
Cost of Sales
$65,000
$47,500
Other Expenses
$29,500
$20,800
Cash and Cash Equivalents
$(25,375)
$19,500
Inventories
$45,000
$36,500
Accounts Receivable (net)
$85,000
$29,000
Non-current assets (net)
$79,000
$35,600
Accounts Payable
$13,600
$15,450
Owner Capital
$95,000
$108,000
Non-current liabilities
$32,000
-
Once youve completed your calculations for both years what we can say about: profitability, liquidity, and financial stability of the bakery. Include recommendations to improve areas of concern.
For this weeks assignment you are tasked with performing a financial ratio analysis of a small bakery.
Based on the financial statement below, calculate the following for 2018 and 2019:
- Profit Margin
- Return on owners capital
- Current Ratio
- Quick Ratio
- Inventory Turnover
The following information relates to the business of Colossus Bakery, and the owner is concerned about the profitability and financial structure of her business as of 12/31/2019, especially since the bank requires repayment of the businesss overdraft of $25,375.
| 12/31/2019 | 12/31/2018 |
Revenue (sales on credit) | $120,000 | $95,000 |
Cost of Sales | $65,000 | $47,500 |
Other Expenses | $29,500 | $20,800 |
Cash and Cash Equivalents | $(25,375) | $19,500 |
Inventories | $45,000 | $36,500 |
Accounts Receivable (net) | $85,000 | $29,000 |
Non-current assets (net) | $79,000 | $35,600 |
Accounts Payable | $13,600 | $15,450 |
Owner Capital | $95,000 | $108,000 |
Non-current liabilities | $32,000 | - |
Once youve completed your calculations for both years what we can say about: profitability, liquidity, and financial stability of the bakery. Include recommendations to improve areas of concern.
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