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RATIO ANALYSIS MEMO
Ratio Analysis Memo – Kudler Fine Foods
ACC/291
University of Phoenix
September 18, 2011
To: Ms. Kathy Kudler, CEO
From: Accounting
Re: Company Ration Analysis
Kudler Fine Foods accounting department has completed a full analysis on the 2003
financial statistics. Different tools of analysis are used to help complete the analysis
measurement. Below you will find exact calculations on liquidity ratios, profitability ratios, and
solvency ratios. Financials from 2003 have helped us get an overall view of the company’s well
being and with further years to come we will be better able to estimate a yearly return.

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RATIO ANALYSIS MEMO
To measure the company’s short-term ability to pay its maturing obligations and to meet
unexpected needs for cash, or liquidity ratio, several ratios are used. First is the current ratio rate.
This measures the company’s liquidity and short-term debt-paying ability. Kudlers current ratio
is 16.95:1. This means the company has $16.95 of current asset for every dollar of current
liability. This is great in comparison to the average industry’s ratio, which is 1:06:1. Kudlers
acid-test ratio, which measure immediate liquidity, is 13:04:1. The average industry’s is 0.29:1.
The receivable turn-over rate is 125.54. In other words, Kudler Fine Foods collects 125
receivables during its given period. This rate is over four times the industry average of 28.2.
After measuring the inventory turnover, Kudler Fine foods inventory is sold 18.9 times during its
accounting period. With the average industry rate being 7.0, its obvious to see the company is
doing well.
Profitability ratios measure the income or operating success of a company for a
given period of time. To help determine profitability ratios, Kudlers accounting department
measured the company’s assets turnovers, profit margins, return on assets, and return on common
Stockholders Equity. To begin, all ratio rates in their given field are higher than the industry’s
average ratio rate. The asset turnover shows Kudler generate $4.04 of sales for each dollar the
company invested in assets. The percentage of each dollar of sales that resulted in net income, or
profit margin amount, is 6.7%. A return of asset rate of 25.3% shows the overall measure of
profitability. This was determined by measured dividing net income by average assets. This rate
is more than three times the industry’s average rate. The return on common Stockholders Equity
has a high rate of 0.90%. This means the company earns $90 for each dollar invested by the
owner.
Solvency ratios, which measure the ability of a company to survive over a long period of
time, that were used are debt to assets ratios and times interest earned rations. The debt to assets
ratios shows the Kudlers creditors contribute 28% of total assets to the company. This low rate
shows Kudler Fine Food contributes much of its success to the business assets. The times interest
earned ratio, which measure the company’s ability to meet interest payments as they come due,
is 18.58 times. .This means the company can cover meet interest payments as many as 18 times
in the accounting period. The number is well above the average of 10.7 times.
The overall ratios prove Kudler Fine Foods is well above average in all areas of business,
therefore, making the company have a great success rate.

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Ratio Analysis Memo - Kudler Fine Foods ACC/291 University of Phoenix September 18, 2011 To: Ms. Kathy Kudler, CEO From: Accounting Re: Company Ration Analysis Kudler Fine Foods accounting department has completed a full analysis on the 2003 financial statistics. Different tools of analysis are used to help complete the analysis measurement. Below you will find exact calculations on liquidity ratios, profitability ratios, and solvency ratios. Financials from 2003 have helped us get an overall view of the company's well being and with further years to come we will be better able to estimate a yearly return. To measure the company's short-term ability to pay its maturing obligations and to meet unexpected needs for cash, or liquidity ratio, several ratios are used. First is the current ratio rate. This measures the company's liquidity and short-term debt-paying ability. Kudler's current ratio is 16.95:1. This means the company has $16.95 of current asset for every dollar of current liability. This is great in comparison to the average industry's ratio, which is 1:06:1. Kudler's acid-test ratio, which measure immediate liquidity, is 13:04:1. The average industry's is 0.29:1. The receivable turn-over rate is 125.54. In other words, Kudler Fine Foods collects 125 receivables during its given period. This rate is over four times the industry average of 28.2. After measuring the inventory turnover, Kudler Fine foods inventory is sold 18.9 times durin ...
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