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What does the calculation of each ratio represent

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Reference no: EM132539790

Question 1. What does the calculation of each ratio represent?

Question 2. How does year one compare with year two, and what trend can be seen when you compare the two years?

Question 3. Is the trend from year one to year two positive or negative?

Question 4. What are the possible reasons for the trend?

Question 5. What recommendations do you have for turning a negative trend to a positive trend?

Ratio                                                     Year 1                       Year two

Current Ratio                                  3.12:1                       2.96:1

Quick Ratio                                         1.34:1                     1.02:1

Receivables Turnover                             9.7 times             10.2 times

Inventory Turnover                             2.4 times                 2.3 times

Profit Margin                                         11.4%                      12.6%

Asset Turnover                                     1.21 times              1.22 times

Return on Assets                                   13.7%                      15.4%

Return on Equity                                     28.5%                    29.3%

Price-Earnings Ratio                             1.4 times                12.4 times

Debt Ratio                                             50.2%                      45.3%

Times Interest Earned                                  9.6 times                13.0 times

Reference no: EM132539790

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