Problem Solving Question Ratio Analysis

a) What is the Working Capital of the Company? Explain and calculate its purpose and whether the Working Capital is appropriate or not. Would you require making changes to the Working Capital and how would you go about it?

b) Calculate the Current Ratio for the year 0006 and 0007. What is your observation? And what action would you recommend for the company's management to take?

c) Calculate the Accounts Receivable Collection Days for the year 0007. Is the outstanding collection days appropriate for this company? What would you recommend?

d) Calculate the Return on Sales for the year 0007 and explain whether this is satisfactory or not?

e) Calculate the Gross Return on Asset for the year 0007 and explain whether the company should invest into new assets or not and what would be the best strategy to fund any investment if you decide the purchase new assets? If you decide not to purchase new assets explain your decision.

f) Calculate the debt to equity ratio for the years 0006 and 0007? Explain and analyze the ratio? What are the implications when you compare the two financial years?

g) What is the total asset to total liabilities for Years 0006 and 0007?

h) What is the Return o Assets?

i) What is the Return on Owner's Equity (ROI)?

j) Comment on any of the calculated ratios that appear unusually high or low or totally out of the range of what is considered acceptable?

k) What is the company's position in Year 0008 to borrow more money from the bank.