In addition to the QuickBooks reports you will be providing Mr. Castle, you decide that preparing ratio analysis for him will provide additional insight into Rock Castle Construction operations. Using your QuickBooks reports from this chapter, calculate the following ratios. The Current Ratio is used as a measure of how well current assets cover the current liabilities that will be due within the next year. If an enterprise has $2 in current assets for each $1 in current liabilities, the current ratio is stated as 2:1. Calculate the Current Ratio (Current Assets/Current Liabilities) for Rock Castle Construction. The debt ratio focuses on the percentage of company assets financed with debt as opposed to equity. For example, a debt ratio or 40% indicates that 40 percent of the enterprise's assets are financed with debt. Too high a debt ratio can indicated increased risk of default on the debt. Calculate the Debt Ratio (Total Liabilities/Total Assets) for Rock Castle Construction. % The profit margin shows the percentage of each sales dollar that is left in profit. For example, a profit margin of 10% indicates that oil average. 10 cents of each dollar of sales is profit. Profit margin varies greatly by industry with some industries, such as discount stores, having low profit margins. Calculate the Profit Margin (Net Income or Net Profit/Total Sales) for Rock Castle Construction for this fiscal quarter. Prepare a brief email to Rock Castle summarizing the results of your ratio analysis and outlining your conclusions, comments, or recommendations based on your analysis. In addition to the QuickBooks reports you will be providing Mr. Castle, you decide that preparing ratio analysis for him will provide additional insight into Rock Castle Construction operations. Using your QuickBooks reports from this chapter, calculate the following ratios. The Current Ratio is used as a measure of how well current assets cover the current liabilities that will be due within the next year. If an enterprise has $2 in current assets for each $1 in current liabilities, the current ratio is stated as 2:1. Calculate the Current Ratio (Current Assets/Current Liabilities) for Rock Castle Construction. The debt ratio focuses on the percentage of company assets financed with debt as opposed to equity. For example, a debt ratio or 40% indicates that 40 percent of the enterprise's assets are financed with debt. Too high a debt ratio can indicated increased risk of default on the debt. Calculate the Debt Ratio (Total Liabilities/Total Assets) for Rock Castle Construction. % The profit margin shows the percentage of each sales dollar that is left in profit. For example, a profit margin of 10% indicates that oil average. 10 cents of each dollar of sales is profit. Profit margin varies greatly by industry with some industries, such as discount stores, having low profit margins. Calculate the Profit Margin (Net Income or Net Profit/Total Sales) for Rock Castle Construction for this fiscal quarter. Prepare a brief email to Rock Castle summarizing the results of your ratio analysis and outlining your conclusions, comments, or recommendations based on your analysis
