On the Assessment 5, Part 2 Template you will find selected ratios for a company over a two-year period. Compare the ratios, and in a separate document (Word or Excel), submit your answers to the following questions:

1. What does the calculation of each ratio represent?
2. How does year one compare with year two, and what trend can be seen when you compare the two years?
3. Is the trend from year one to year two positive or negative?
4. What are the possible reasons for the trend?
5. What recommendations do you have for turning a negative trend to a positive trend?

Ratio Year 1 Year 2 Current ratio Quick ratio Receivables turnover Inventory turnover Profit margin Asset turnover Return on assets Return on equity Price-earnings ratio Debt ratio Times interest earned 3.12:1 1.34:1 9.7 times 2.4 times 11.4% 1.21 times 13.7% 28.5% 10.4 times 50.2% 9.6 times 2.96:1 1.02:1 10.2 times 2.3 times 12.6% 1.22 times 15.4% 29.3% 12.4 times 45.3% 13.0 times Ratio Year 1 Year 2 Current ratio Quick ratio Receivables turnover Inventory turnover Profit margin Asset turnover Return on assets Return on equity Price-earnings ratio Debt ratio Times interest earned 3.12:1 1.34:1 9.7 times 2.4 times 11.4% 1.21 times 13.7% 28.5% 10.4 times 50.2% 9.6 times 2.96:1 1.02:1 10.2 times 2.3 times 12.6% 1.22 times 15.4% 29.3% 12.4 times 45.3% 13.0 times