Question
You are asked to assess the financial performance of Pike Company and have been given the following information for 2016 to 2018. 2016 2017 2018
You are asked to assess the financial performance of Pike Company and have been given the following information for 2016 to 2018.
2016 | 2017 | 2018 | ||
Current Ratio | 1.80 | 2.20 | 1.40 | |
Quick Ratio | 1.20 | 2.00 | .80 | |
Debt Ratio | .80 | .70 | .90 | |
Debt to Equity Ratio | 4.00 | 1.80 | 8.00 | |
Inventory Turnover | 38 | 40 | 45 | |
Average Number of Days Receivables | 10 | 20 | 45 | |
Return on Equity | 14% | 30% | 35% | |
Return on Assets | 10% | 20% | 15% |
1.How liquid is the business?
2.What is their debt structure? Mostly equity or debt?
3.Are they efficient in their operations?
4.What does profitability look like for the business?
5.Are there any red flags?
6.Is the business sustainable?
7.Where can the business improve?
8.Where are their strengths and weaknesses?
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