Developed the ratio calculations and industry comparisons

Reference no: EM13899471

Luna Lighting, a retail firm, has experienced modest sales growth over the past three years but has had difficulty translating the expansion of sales into improved profitability. Using three years' financial statements, you have developed the following ratio calculations and industry comparisons. Based on this information, suggest possible reasons for Luna's profitability problems.

Industry Averages	2013	2012	2011	2013
Current	2.3X	2.3X	2.2X	2.1X
Average collection period	45 days	46 days	47 days	50 days
Inventory turnover	8.3X	8.2X	8.1X	8.3X
Fixed asset turnover	2.7X	3.0X	3.3X	3.5X
Total asset turnover	1.1X	1.2X	1.3X	1.5X
Debt ratio	50%	50%	50%	54%
Times interest earned	8.1X	8.2X	8.1X	7.2X
Fixed charge coverage	4.0X	4.5X	5.5X	5.1X
Gross profit margin	43%	43%	43%	40%
Operating profit margin	6.3%	7.2%	8.0%	7.5%
Net profit margin	3.5%	4.0%	4.3%	4.2%
Return on assets	3.7%	5.0%	5.7%	6.4%
Return on equity	7.4%	9.9%	11.4%	11.8%

Reference no: EM13899471

Questions Cloud

Describe the routing and switching infrastructure : Describe the routing and switching infrastructure and the routing protocols used in the environment. Illustrate the secure routing and switching infrastructure topology through the use of graphical tools in Microsoft Word or Visio, or an open sourc..

Acetaminophen is less acidic than acetanilide : Acetaminophen is less acidic than Acetanilide? Why? Explain!

Estimate the ethylene glycol c2h6o2 mass in gram : Estimate the ethylene glycol C2H6O2 mass in gram that should be added to 12.0 L of water to produce a solution for use in a car's radiator as antifreeze that freezes at -23.3oC. Assume the density of water to be 1.00 g/mL and Kf = 1.86oC .kg/mol.

The corporate rundown criteria unsatisfactory low-high pass : The Corporate Rundown Criteria Unsatisfactory Low Pass Pass High Pass Honors

Developed the ratio calculations and industry comparisons : Using three years' financial statements, you have developed the following ratio calcula- tions and industry comparisons. Based on this information, suggest possible reasons for Luna's profitability problems.

Stockholder''s equity of ernst company consists : 1.Stockholder's equity of Ernst Company consists of 80,000 shares of $ 5 par val

Calculate current ratio and operating profit margin ratios : Calculate the following ratios assuming RareMetals Inc. uses the FIFO method of inventory valuation: gross profit margin, operating profit margin, net profit margin, current ratio, and quick ratio.

Creating a public health fact sheet : Creating a Public Health Fact Sheet- What is a fact sheet? Who is the audience for my fact sheet? What is my fact sheet about

Explain what asset management methods will be most cost : Explain what asset management methods will be most cost effective

User Account

All Pages