Reference no: EM132622274

You have been hired as an analyst for a Bank and your team is working on an independent assessment of a company that has applied to avail financing facilities.

Your assistant has provided you with the following data (ratios) of the company's financial performance over the past three years and the industry averages:

	2016	2017	2018	Industry Averages
Current	2.3	2.5	2.6	2.7
Quick	1	0.5	0.6	1
Average Collection Period	37.4	45.5	39.5	32
Inventory Turnover	5.2	4.1	4	6.1
Fixed Assets Turnover	10	8	7	7
Total Assets Turnover	2.5	2	2.2	2.5
Debt to Total Assets	55.00%	62.20%	43.80%	50.00%
Interest Coverage	4.3	1.7	4.6	6.2
Net Profit Margin	3.60%	-1.60%	2.60%	3.60%
Return on Assets	7.20%	-3.30%	6.40%	9.00%
Return on Equity	13.30%	-17.10%	12.80%	17.90%
Price/Earnings (P/E)	12	-6.3	9.7	16.2

Using the information provided, you are required to analyze the company's financial condition and performance over the last three years against the industry averages by answering the following questions:

Question a) What can you say about the liquidity position of the company and its ability to meet short term obligations?

Question b) Analyze the company's asset utilization/turnover ratio(s)?

Question c) Evaluate the company's leverage and profitability position?

Question d) How would you perceive the overall performance of the company in terms of a lenders perspective?