Ratios Analysis
		2020			2019
1) Profit Margin:	Net Income	$ (120.00)	-30%		$ 278.00	43%
	Revenues	$ 403.00			$ 640.00
2) Asset Turnover:	Revenues	$ 403.00	.16 times		$ 640.00	.31 times
	Average Total Assets	$ 2,591.00			$ 2,031.00
3) Return on Assets:	Net Income	$ (120.00)	-5%		$ 278.00	14%
	Average Total Assets	$ 2,591.00			$ 2,031.00
4) Debt to Equity Ratio:	Total Liabilities	$ 773.00	.56 times		$ 773.00	.61 times
	Total Equity	$ 1,378.00			$ 1,258.00
5) Return on Equity:	Net Income	$ (120.00)	-9%		$ 278.00	22%
	Average Owners Equity	$ 1,318.00			$ 1,258.00
6) Current Ratio:	Current Assets	$ 2,282.00	99 times		$ 1,586.00	69 times
	Current Liabilities	$ 23.00			$ 23.00

Using the information above, type a narrative of your analysis of the financial statements. Use the example below to follow as a template.

A banker is likely to focus on liquidity and solvency measures since their primary concern is to be paid back their principle loan along with interest on the loan balance. In addition, bankers frequently will also look at the companys profitability since it is those profits that ultimately will determine the companys ability to generate cash to pay back the banker. With regard to liquidity, Kates Cards look very strong. The current ratio of 4.86 and quick ratio of 3.04 indicate that Kates Cards has sufficient current assets to easily pay its current liabilities. Less strong, but still encouraging, is the operating cash flow-to-current liabilities ratio of 1.33. This lower value can be explained by the low operating cash flow often associated with start-up companies that require a large investment in working capital. Kates Cards is able to collect its receivables on average in just under 10.9 days, a very good number for a start-up company. Kates days sales in inventory of 27.5 days is also a good number. Kates Cards has a debt to equity ratio of 0.69, indicating that debt is only 69 percent of stockholders equity. A banker will likely be pleased to see this high level of equity, indicating a strong position of solvency. The times-interest-earned ratio of 31.0 provides further support of the companys strong solvency position. As noted above, the low level of operating cash flow common with start-up companies has lead to a low operating-cash-flowto-capital-expenditures ratio of 0.35. An additional reason for this low ratio is the need for a large expenditure in the start-up year for equipment. This level of expenditure is unlikely in the near future. Finally, Kates Cards reported exceptional profitability year for a start-up company. The companys gross profit percentage of 42.7 percent indicates Kate is able to charge a high markup on her product sales. A return on sales of 11.7 percent along with return on assets of 72.4 percent and return on common stockholders equity of 140.6 percent indicate that Kate is also able to control operating costs. Overall, a banker will likely see Kate as a low risk for additional financing.