Ratio Analysis Memo

Ratio Analysis Memo July 9, 2012 Memo To From Date July 9, 2012 RE Kudler Fine Foods ratio analysis One of the things that we forget be going over is some of the ratios for Kudler Fine Foods through Liquidity, Profitability, and solvency ratios. We will find into some of the finding that were free-base through these ratios and discuss them. One of the things that we found was where Kudler Fine Foods position is with these ratios. The first area that we look at is profitability. Profitability RatiosWhen looking through the profits of the company through the balance mainsheets we will look at a couple of areas. The first area that we will look into is the asset turnover of the company. The beginning assets started in at $1,971,000. When you take that by the add assets of $2,675,250 you get the turnover margin which is 4. 04. engagement Sales___ = Asset swage $10,796,200 = 4. 04 Total Assets $2,675,250 Next area we suppose is the profit margin. You pull in through the balance s heet that Kudler Fine foods over the board did pretty good when you look at it from a profit stand point.The way we calculated the profit margin was winnings Income over sales and this was the information that we got Net Income = Profit Margin$668,950__ = . 06 Net Sales $10,796,200 Looking into the return on assets it was interesting to see some of the findings when we calculated. Net Income____________ = Return on Assets $668,950 = . 28 (Beginning + Ending total assets)/2 ($1,971,000 +$2,675,250)/2 Return on uncouth stockholders equity Net Income = Return on Common stockholders equity. $668,950 =. 0 Shareholders equity $746,290 Solvency Ratios Solvency ratios measure the companys ability to meet long-term obligations. This is a ratio that measures the companys size after assess income. One of the things that you look at with solvency ratios is debt to total assets. Total liabilities = Debt to total assets $746,290 = . 27 Total Assets $2,675,250 The other area that is measured in Solvency ratios is Time interest clear Earnings before interest & Taxes = Time Interest earned $10,796,200 = $1,376. 8 Interest Expense $7,845 Liquidity Ratios A company is labeled by how easy it can meet its short term obligations. Something that I think is happening pretty well at Kudler. When you look at the different ratios of the Liquidity you see some good numbers. Let us dive into these ratios so you can see what I am talking about. watercourse Ratio Current Assets = Current Ratio$1,971,000 = $16. 94 Current Liabilities $116,290 Receivables Turnover Sales Revenue = Receivable Turnover $10,804,000 = $12. 60Average Acct Receivable $86,000 Inventory Turnover Cost of goods sold = Inventory Turnover$8,974,831 = $10 Average Inventory($467,890 + $429,090)/2 Acid Test Liquid Assets = Acid Test$1,971,000 = $16. 94 Current Liabilities$116,290 When you look at the overall ratios of Kudler Fine Foods you see that things are going in the right direction. Looking at the profitability m argins you see increases in a short amount. Anything with an increase is good news. I would learn that Kudler Fine Foods is in good condition and is steadily improving.