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




Current assets



Cash and cash equivalents

£ 330

£ 360

Accounts receivable (net)






Prepaid expenses



Total current assets



Property, plant, and equipment






Intangibles and other assets



Total assets



Current liabilities

£ 900

£ 810

Long-term liabilities



Stockholders' equity-common



Total liabilities and stockholders' equity



Soule Company
Income Statements
For the Years Ended December 31




Sales revenue



Costs and expenses



Cost of goods sold



Selling and administrative expenses



Interest expense



Total costs and expenses



Income before income taxes



Income tax expense



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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