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Should you invest in abc merchandising company

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Reference no: EM133155606

Question - Financial Ratio Analysis of ABC Merchandising Company for the year 2020 -

Liquidity

Current Ratio = 4.15

Quick Ratio = 1.07

Working Capital = 403,000

Solvency

Debt Ratio = 16.82%

Debt-to-Equity Ratio = 20.22%

Equity Ratio = 83.18%

Profitability

Gross Margin Ratio = 62.8%

Net Profit Margin Ratio = 10.83%

Return on Capital Employed = 18.64%

Required - With the given data above, answer the following:

1. If you're an investor, should you invest in ABC Merchandising Company? Explain your answer.

2. Should the creditors be confident in supplying ABC Company goods for merchandise and allowing a 90-day term? Explain your answer.

3. The owner is worried that his business is not really that profitable. He is considering ending the business if no one would not invest in his company. What would you advise him based on the analysis report?

Reference no: EM133155606

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