Wgu Fnt1 Task 1 Essay

903 Words Aug 21st, 2013 4 Pages
To: Company G CEO
RE: Ratio Analysis-Company G
Company G: Ratios for years 2011 and 2012 compared to industry standards. A. Current Ratio: The ability for a company to pay short term obligations is measured by this ratio. In 2011 Company G moved from 1.86 to 1.77. Compared to the 1.9 Home Center Retail Benchmarks industry ratio, the numbers are below standards. Current Ratio represents values above 2 quartile industry benchmarks data (1.4 to 2.1). Current Ratio represents a weakness for Company G. B. Acid Test Ratio: Determining the volume of short-term assets to cover immediate liabilities without selling inventory is the purpose for the Acid Test Ratio. Numbers below 1 could mean liabilities cannot be paid. A dive from 0.64
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Company G jumped from a $0.672 in 2001 to a $1.03 for the year 2012. Benchmarks for the quartile industry are 0.83/0.87/0.9. Earnings per share of common stock for Company G represent and increment above average. Earnings per Share of Common Stock represent strength for Company G. L. Price earnings ratio: This ratio values current share price and compares to earnings per share. An increment from $5.21 in 2011 to $5.57 for the year 2012, although a weak separation, represents a ratio above quartile industry data ($5.5). Best case scenario would be to see that ratio increase greatly. According to MSN, Home Depot ratio is 20.9. Industry average represents a $21.0 ratio. Price Earnings Ratio represents weakness for Company G. M. Book value per share of common stock: Measurement to determine levels of share safety once debt is paid. An increment from 20011’s $4.25 to a $5.87 ratio in 2012 tops quartile industry benchmarks (4.9/5.5), 6.0 being the highest. Book Value per Share of Common Stock represents strength for Company G.

INDUSTRY TRENDS AND COMPANY G’S STATUS WITHIN INDUSTRY STANDARDS (Based on ROI Reports)

1. Inventory Turnover Trends
Company G keeps up with industry average (5.2 in 2012) 2. Current Ratio for Average Trends
Company G keeps up with industry average (1.86 in 2012) 3. Debt to Worth Industry
Company G shows ratios below industry competitors (1.5 in 2011)

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