Any implications of this from a policy perspective

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Reference no: EM132275499

Assignment

Using the financial ratios calculated from the 2015 annual report of PVC Pipes, assess the short-term liquidity, operating efficiency, capital structure and long-term solvency and profitability of the firm.

Ratio	2015	2014
Current	1.52x	1.48x
Quick	1.01x	0.98x
Average collection period	65 days	58 days 5
Days inventory held	36 days	28 days 2
Days payable outstanding	61 days	47 days
Cash conversion cycle	40 days	39 days
Fixed asset turnover	4.91x	4 4.02x
Total asset turnover	1.70x	1.43x
Debt ratio	67.10%	63.08%
Long Term debt to total capitalization	46.82%	42.51%
Times interest earned	(5.10x)	1.65x
Fixed charge coverage	(2.34x)	1.40x
Cash flow adequacy	0.32x	0.87x
Gross profit margin	10.10%	12.81%
Operating profit margin	(5.93%)	2.75%
Net profit margin	(4.98%)	0.91%
Cash flow margin	3.84%	7.00%
Return on investment	(8.63%)	1.28%
Return on equity	(25.49%)	3.51%
Cash return on assets	6.90%	9.10%

Points to consider: (Please do not simply answer the questions below - they are meant to help

you focus your ratio analysis but feel free to include add'l points as appropriate.)

How does short term liquidity look and what supports your assessment?

What do we see happening with the cash conversion cycle and associated components?

Any implications of this from a policy perspective?

Would you assess the capital structure as risky or not risky considering any trends in long-term/total debt?

What is happening to CFO (cash flow from operations)?

Profitability assessment and where problems may or may not be impacting your assessment.

Reference no: EM132275499

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