Accounting Project: Current Ratio Essay

867 Words Jan 30th, 2013 4 Pages
In this project, you will assess the financial health of the business in question, using financial analysis tools in your textbook. Please make your work neat and show all computations. For some of your computations, you will be comparing your results with averages of businesses within your business’s industry. For assistance in obtaining industry averages, see the Reference Desk at the library. Attach the sheet(s) obtained which show industry averages to this paper. In some cases, the industry averages sheet may not have the specific ratio, but you may be able to compute the ratio using the information on the industry average sheet. If no industry average is given, but you are able to compute the industry average, please do so. …show more content…
It measures the percentage of each dollar of sales that results in net income | From the income statement, compute the Profit Margin ratio for all years presented. 2009:$435,994/$5,298,668=8%2010:$509,799/$5,671,009=8%2011:$628,962/$6,080,788=10% | What is the industry average for this ratio? 5.5% | Is your company’s profit margin ratio weak or strong? Briefly explain your opinion. For all three years Hershey’s ratio was higher than that of the industry average. It remained the same between 2009 and 2010 but it did increase from 2010 to 2011. This shows that the profit for the Hershey Company is increasing. |

The Inventory Turnover Ratio is defined on page 296. Please give a brief definition of the Inventory Turnover ratio here. Inventory Turnover Raito is the Cost of goods sold divided by average inventory. This indicates how quickly a company sells its goods during the year. From that you can determine how many days the product is in the inventory by taking 365 divided by the inventory turnover ratio. | From the financial statements, compute the Inventory Turnover ratio, and the Days in Inventory, for the most recent year presented. 2011 Turnover Raito 2011 Days in inventory$3,548,896/$648,953=5.5 times 365/5.5=66 days | What is the industry average for this

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