Ratio Analysis

Compute the following using the information from the financial statements you have produced for 2019. Show your work. Explain to me what every calculation means (i.e. explain the answer to me in non-book language).  Provide graphs which show the three year trends of each ratio.

 

–        Earnings Per Share

–        Price-earnings ratio

–        Return on Equity

–        Working Capital

–        Current Ratio

–        Quick Ratio

–        AR Turnover

–        Inventory Turnover

–        Gross Profit

–        Gross Profit Ratio

–        Operating Income

–        Operating Margin

–        Debt-to-equity ratio

–        Book value per share

 

 

 

  1. Business Analysis

Separate from your ratio analysis, perform an analysis of your business using your results from the required calculations listed above and any other trend information you deem to be relevant. Use these calculations to determine how the company is doing overall. Hint: Consider creating graphs/tables to support your conclusions NOTE: Assume that you are the CEO of the company when preparing your response to this question.

 

  1. Projected Income Statement for 2020

Build a projected income statement for next year based on forecasted sales that equal $3,500,000 (do not use a different amount than the $3,500,000 provided). Use the results of the analysis you performed in the preceding question and any other information you deem to be relevant to build this income statement. Provide a brief explanation of the method(s) your group used to determine the projected numbers per account.

 

  1. Actual vs. Predicted Earnings Per Share Evaluation

 

Analysts predicted earnings per share (EPS) for your company to be $0.12 at the close of 2019. How does this compare to actual EPS for 2019? If actual EPS is higher than the analysts’ prediction, what factors contributed to the success? If actual EPS is lower than the prediction, how will you explain the shortfall to your investors? Is there anything you could have done to meet the prediction? NOTE: Assume that you are the CEO of the company when preparing your response to this question.