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.


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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