Evaluate the financial performance of a company

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Reference no: EM13871941

Part 1 - Financial Analysis

The condensed financial statements of Soule Company for the years 2013 and 2014 are presented below.

Soule Company

Balance Sheets
December 31

 

2014

2013

Current assets

 

 

Cash and cash equivalents

£ 330

£ 360

Accounts receivable (net)

470

433

Inventory

430

390

Prepaid expenses

120

160

Total current assets

1.350

1.343

Property, plant, and equipment

420

380

Investments

10

10

Intangibles and other assets

530

510

Total assets

£2.310

£2.243

Current liabilities

£ 900

£ 810

Long-term liabilities

390

393

Stockholders' equity-common

1,020

1,040

Total liabilities and stockholders' equity

£2.310

£2.243

Soule Company
Income Statements
For the Years Ended December 31

 

2014

2013

Sales revenue

£4,000

£3,600

Costs and expenses

 

 

Cost of goods sold

984

895

Selling and administrative expenses

2,400

2,330

Interest expense

10

20

Total costs and expenses

3.394

3.245

Income before income taxes

606

355

Income tax expense

242

142

Net income

£ 364

£ 213

Compute the following ratios for 2014 and 2013.

(a) Current ratio.

(b) Inventory turnover. (Inventory on 12/31/12 was £326.)

(c) Profit margin ratio.

(d) Return on assets. (Assets on 12/31/12 were £2,100.)

(e) Return on common stockholders' equity. (Stockholders' equity on 12/31/12 was £960.)

(f) Debt to total assets ratio.

(g) Times interest earned.

Critically evaluate your ratio calculations and conclude on the current state of the company.

Part 2 - Performance Evaluation

Evaluate the financial performance of a company of your choosing using the knowledge and technical skills that you have gained during the course so far. Provide a theoretical explanation of any ratio analysis. No need to recalculate ratios, often the financial reports provides these.

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Reference no: EM13871941

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