Oceanview Marine Company Ratio Analyses December 31, 2018 LIQUIDITY RATIOS: Unadjusted 12/31/2018 12/31/2017 CHANGE PERCENT INDUSTRY CHANGE AVERAGE 2.31 2.49 -0.18 -7.23% 1.53 Current ratio current assets/ current liabilities Quick ratio (current assets - inventory) / current liabilities Sales / Receivables net sales net ending receivables Number of days sales in A/R net ending receivables / (net sales/365) Inventory turnover cost of sales / average inventory 0.42 0.40 0.02 5.00% 0.43 20.29 22.1.4 16.05 17.78 -1.73 -9.73% 165) 22.1 4 20.83 2.21 10.76 1.41 1.34 .075.22 2 9.53 17.99 PROFITABILITY/PERFORMANCE RATIOS: 1.41 Gross profit margin (%) gross profit net sales Income before taxes / Owners' equity 23.83% 27.5% 27.69 -.|.40 e before taxes / total owners' equity JO 101 .03 42.86 0.06 0.06 0.04 0.02 50.00% 0.04 44.29 37.33 6.96 18.64% 19.07 Income before taxes / Total assets net income before taxes / total assets Sales / Long-term assets net sales / net long-term assets Sales/ Total assets net sales / total assets Sales / Working capital net sales/ (current assets - current liabilities) 1.54 1.49 0.05 3.36% 1.32 2.82 2.59 2.59 0.23 8.88% 2.18 SOLVENCY RATIOS: 0.56 0.59 -0.03 0.31 -5.08% 0.07 0.06 -0.01 -14.29% 0.47 Owners' Equity / Total assets total stockholders' equity / total assets Long-term assets/Owners' equity net long-term assets/total stockholders' equity Current liabilities/Owners' equity current liabilities/total stockholders' equity Total Liabilities/Owners' equity total liabilities/total stockholders' equity ity 75 79 .66 70 .04 13.64 1.13 od 12.8 le 2.03 Current workepapers--audit planning + Page 6 Preliminary Analytical Procedures Oceanview Marine Company December 31, 2018 Liquidity: Although the liquidity ratios do not indicate there are an possible warning signs: The current ratio declined by over 7% during in is a sign of good financial condition, and it is above the industry average. ndicate there are any serious problem areas, they do reveal some declined by over 7% during the year. However, it is still above the 2:1 level, which Profitability: Solvency: The solvency ratios have deteriorated somewhat: . Long-term Assets to Owners' Equity dropped nearly 15% Current workpapers--audit planning + Page 7 Oceanview Marine Company Ratio Analyses December 31, 2018 LIQUIDITY RATIOS: Unadjusted 12/31/2018 12/31/2017 CHANGE PERCENT INDUSTRY CHANGE AVERAGE 2.31 2.49 -0.18 -7.23% 1.53 Current ratio current assets/ current liabilities Quick ratio (current assets - inventory) / current liabilities Sales / Receivables net sales net ending receivables Number of days sales in A/R net ending receivables / (net sales/365) Inventory turnover cost of sales / average inventory 0.42 0.40 0.02 5.00% 0.43 20.29 22.1.4 16.05 17.78 -1.73 -9.73% 165) 22.1 4 20.83 2.21 10.76 1.41 1.34 .075.22 2 9.53 17.99 PROFITABILITY/PERFORMANCE RATIOS: 1.41 Gross profit margin (%) gross profit net sales Income before taxes / Owners' equity 23.83% 27.5% 27.69 -.|.40 e before taxes / total owners' equity JO 101 .03 42.86 0.06 0.06 0.04 0.02 50.00% 0.04 44.29 37.33 6.96 18.64% 19.07 Income before taxes / Total assets net income before taxes / total assets Sales / Long-term assets net sales / net long-term assets Sales/ Total assets net sales / total assets Sales / Working capital net sales/ (current assets - current liabilities) 1.54 1.49 0.05 3.36% 1.32 2.82 2.59 2.59 0.23 8.88% 2.18 SOLVENCY RATIOS: 0.56 0.59 -0.03 0.31 -5.08% 0.07 0.06 -0.01 -14.29% 0.47 Owners' Equity / Total assets total stockholders' equity / total assets Long-term assets/Owners' equity net long-term assets/total stockholders' equity Current liabilities/Owners' equity current liabilities/total stockholders' equity Total Liabilities/Owners' equity total liabilities/total stockholders' equity ity 75 79 .66 70 .04 13.64 1.13 od 12.8 le 2.03 Current workepapers--audit planning + Page 6 Preliminary Analytical Procedures Oceanview Marine Company December 31, 2018 Liquidity: Although the liquidity ratios do not indicate there are an possible warning signs: The current ratio declined by over 7% during in is a sign of good financial condition, and it is above the industry average. ndicate there are any serious problem areas, they do reveal some declined by over 7% during the year. However, it is still above the 2:1 level, which Profitability: Solvency: The solvency ratios have deteriorated somewhat: . Long-term Assets to Owners' Equity dropped nearly 15% Current workpapers--audit planning + Page 7