Financial Ratios Assignment | Homework For You

Jim Connor is the owner of Wave Riders, a surf shop located in West Palm Beach, Florida. Jim has just received his end of the year financial statements from his accountant. When he sees his gross and net income he is dismayed. With almost $250,000 in gross profit he just doesn’t understand why he is always short on cash to pay his employees and suppliers. One of his largest suppliers of surf boards notified him just last month that they would no longer extend him credit and he would have to pre-pay all of his orders. He puts a call into his accountant to set up a meeting with her to discuss the financial health of his businessHomework For You

Don't use plagiarized sources. Get Your Assignment on
Financial Ratios Assignment | Homework For You
Just from $13/Page
Order Now

. Questions Part 1

1. Using the financial statements provided, calculate the 12 financial ratios discussed in your text using the financial information that is provided below for Wave Riders,

2. Looking at these ratios, are there any of them that look suspicious? If so, which ratios are they and what about them do you believe is cause for concern?

Part 2

1. Using the industry ratios that have been provided, compare Wave Rider’s ratios with those for the industry. What “red flags” do you see when making this comparison?

2. What do you think might be causing the deviations that you see between Wave Riders ratios and the industry ratios?

Part 3

1. What recommendations would you make to Jim to help him improve the financial performance of Wave Riders in the future?

Prepare a memo to Jim outlining your recommendations, making certain to include your reasons for the recommendation (i.e. ratio analysis and/or comparison to industry ratios). Financial Statements Wave Riders Income Statement For the year ended December 31, 20XX

Merchandise Sales $500,000

Cost of Goods Sold $255,000

Gross Profit $245,000

Wage Expense $140,000

Rent Expense $45,000

General and Administrative $45,000

Total Expenses $230,000

Earnings Before Interest & Taxes (EBIT) $15,000

Interest $5,000

Income before tax $10,000 Tax (@ 25% rate)

$2,500 Net Income/(Loss)

$7,500Homework For You

Wave Riders Statement of Owner’s Equity For the year ended December 31, 20XX

Beginning Capital $0

Owner Contributions $5,000

Net Income/(Loss) $7,500

$12,500 Owner Withdrawal $0

Ending Capital $12,500

Wave Riders Balance Sheet As of December 31, 20XX

Assets Current Assets Cash and Cash Equivalents $29,500

Accounts Receivable $10,000

Merchandise Inventory $100,000

Prepaid Expenses $7,500

Total Current Assets $147,000

Property, Plant, and Equipment $5,000

Total Assets $152,000

Liabilities Current Liabilities Accounts Payable $74,250

Wages Payable $10,250

Total Current Liabilities $84,500

Long-Term Debt $55,000

Total Liabilities $139,500

Owner's Equity $12,500

Total Liabilities and Owner's Equity $152,000

Wave Riders Statement of Cash Flows For the year ended December 31, 20XX

Cash provided by operating activities Net Income (loss) $7,500

Changes in operating assets & liabilities Inventories ($100,000)

Accounts Receivables ($10,000)

Accounts Payable $10,250

Accrued expenses $7,500

Cash provided by (used by) operations ($85,000)

Cash provided by investing activities Purchases of fixed assets ($5,000)

Cash provided by (used by) investing ($5,000)

Cash provided by financing Long-term borrowing $55,000

Owner contributions $5,000 Payment of Debt and Financing Costs ($5,000)

Cash provided by (used by) financing $55,000

Change in cash ($35,000)

Beginning cash balance $0

Ending cash balance ($35,000)Homework For You

Industry Ratios Liquidity & Solvency Ratios Current Ratio 2.1

Quick Ratio 0.95

Debt Ratio 1.05

Debt to Net Worth Ratio 8.5

Times Interest Earned Ratio 4.2

Return on Equity (ROE) 5.25

Operating Ratios Average Inventory Turnover Ratio 6.85

Average Receivables Turnover Ratio 10

Average Collection Period Ratio 36.5

Payables Turnover Ratio 5.8

Average Payable Period Ratio 62.9

Net Sales to Total Assets Ratio 3.3

Profitability Ratios Net Profit on Sales Ratio 4.8%

Net Profit to Assets Ratio 4.55%

Net Profit to Equity Ratio 1.8. Get Finance homework help today

Calculate your paper price
Pages (550 words)
Approximate price: -

Why Choose Us

Quality Papers

At Myhomeworkwriters.com, we always aim at 100% customer satisfaction. As such, we never compromise o the quality of our homework services. Our homework helpers ensure that they craft each paper carefully to match the requirements of the instruction form.

Professional Academic Writers

With Myhomeworkwriters.com, every student is guaranteed high-quality, professionally written papers. We ensure that we hire individuals with high academic qualifications who can maintain our quality policy. These writers undergo further training to sharpen their writing skills, making them more competent in writing academic papers.

Affordable Prices

Our company maintains a fair pricing system for all academic writing services to ensure affordability. Our pricing system generates quotations based on the properties of individual papers.

On-Time delivery

My Homework Writers guarantees all students of swift delivery of papers. We understand that time is an essential factor in the academic world. Therefore, we ensure that we deliver the paper on or before the agreed date to give students ample time for reviewing.

100% Originality

Myhomeworkwriters.com maintains a zero-plagiarism policy in all papers. As such, My Homework Writers professional academic writers ensure that they use the students’ instructions to deliver plagiarism-free papers. We are very keen on avoiding any chance of similarities with previous papers.

Customer Support 24/7

Our customer support works around the clock to provide students with assistance or guidance at any time of the day. Students can always communicate with us through our live chat system or our email and receive instant responses. Feel free to contact us via the Chat window or support email: support@myhomeworkwriters.com.

Try it now!

Calculate the price of your order

You will get a personal manager and a discount.
We'll send you the first draft for approval by at
Total price:
$0.00

How it works?

Follow these simple steps to get your paper done

Place your order

Fill in the order form and provide all details of your assignment.

Proceed with the payment

Choose the payment system that suits you most.

Receive the final file

Once your paper is ready, we will email it to you.

Our Samples

Our writers complete papers strictly according to your instructions and needs, no matter what university, college, or high school you study in.

Categories
All samples
Analysis (any type)
Argumentative essays
Dissertation/Dissertation chapter
Analysis (any type)
Advantages and disadvantages of lowering the voting age to thirteen
Undergrad. (yrs 1-2)
Political science
4
View this sample
Argumentative essays
Is euthanasia ethical or not?
Undergrad. (yrs 3-4)
Nursing
3
View this sample
Dissertation/Dissertation chapter
Videoconferencing as a teaching tool
Undergrad. (yrs 3-4)
Education
10
View this sample

Our Homework Writing Services

My Homework Writers holds a reputation for being a platform that provides high-quality homework writing services. All you need to do is provide us with all the necessary requirements of the paper and wait for quality results.

Essays

Essay Writing Services

At My Homework Writers, we have highly qualified academic gurus who will offer great assistance towards completing your essays. Our homework writing service providers are well-versed with all the aspects of developing high-quality and relevant essays.

Admissions

Admission and Business Papers

With Myhomeworkwriters.com, we will help you secure a position at your desired institution. Our essay writing services include the crafting of admissions papers. We will still help you climb your career ladder by helping you write the official papers that will help you secure a job. We will guide you on how to write an outstanding portfolio or resume.

Editing

Editing and Proofreading

Myhomeworkwriters.com has a professional editorial team that will help you organize your paper, paraphrase it, and eliminate any possible mistakes. Also, we will help you check on plagiarism to ensure that your final paper posses quality and originality.

Coursework

Technical papers

My Homework Writers harbors professional academic writers from diverse academic disciplines. As such, we can develop homework writing services in all academic areas. The simplicity or complexity of the paper does not affect the quality of homework writing services.