FIN 571 Week 2 Individual Assignment Ratio Analysis
- University of Phoenix / FIN 571
- 11 Dec 2017
- Price: $8
- Other / Other
Ratio Analysis
(Individual Assignment)
You may use excel or word.doc format for this assignment.
- Analysis of cost of goods sold problem.
1992 1993 1994
Gross Profit Margin 60% 55% 51%
What is happening to cost of goods sold? As was done in the week 2 online lecture on ratio analysis, please assume sales of 1 dollar each year as you do your analysis. You need to show the cost of goods as pennies per dollar of sales. This problem follows the process shown in the online lecture section titled: “Another Income Statement Analytical Approach: Percent of Sales”
(10 points)
- Overhead (or Sales, General and Administrative Expense) problem.
1992 1993 1994
Gross Profit Margin 40% 39% 41%
Operating Margin (NOI/Sales) 15% 10% 5%
What is happening to S,G and A (or overhead expenses)? Please set up an illustration assuming sales of 1.00 dollar each year just as you did in problem number one. You need to show cost of goods and S,G and A (or overhead expenses) as pennies per dollar of sales.
(10 points)
- Balance Sheet Problem
1992 1993 1994
Annual Sales Growth (over prior yr) + 1% 0% +1%
Current Ratio 3.5X 2X 1.2X
Average Collection Period 25 days 30 days 55 days
What is happening to liquidity? What are some follow-up questions your would ask? (10 points)
- Using the data provided below, which is the better managed company? Why? Please support your answers by calculating appropriate ratios. You can find the ratios and formulas for these ratios in the week two online lecture on ratio analysis. (10 points)
Company A Company B
Sales 10 million dollars 20 million dollars
Net Income 1 million dollars 2 million dollars
Total Assets 10 million dollars 15 million dollars
USA 
India