Find out performance ratio-activity ratio

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Can you provide me with some of those strengths and weaknesses and explain how the company is performing in relation to those?

Performance Ratio

Profit Margin= Ratio for 2015 was 1.96%, while 2014 was 1.38%. There was a decline in the profitablity of the firm. It might be due to seasonal change, or it had a low demand, which could have led to the fall in sales and the profit ratio.

Activity Ratio

Inventory turnover ratio= Ratio for 2015 was 3.03, and 2.89 for 2014. It shows that there had been a notable reform in managing the inventories. Steps had been taken so as to see that there is no dead investment in inventory.

Financing Ratio

Interest coverage ratio= This ratio indicates a firm's ability to cover its current interest expenses from the profits earned. It was 3.99 times for 2015, which is a good indication of the firm's performance.

Liquidity Ratio

Quick ratio= It was 1.21 for 2015. A ratio of 1 is considered ideal when it comes to quick ratio. Since the company's ratio is above ideal, it is not going to face any liquidity crunch and financially healthy talking about its short term liabilities.

Reference no: EM132694432

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