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Ratio Analysis
( Individual Assignment )
You may use excel or word . doc format for this assignment .
Please post your homework as a word . doc or excel file in the class
discussion section below by the due date .
1 . Analysis of cost of goods sold problem .
1992
1993
1994
Gross Profit Margin
60 %
55 %
51 %
What is happening to cost of goods sold ? As was done in the week 2
online lecture on ratio analysis , please assume sales of 1 dollar each year
as you do your analysis . This problem follows the process shown in the
Week 2 Ratio Analysis online lecture section titled : " Another Income
Statement Analytical Approach : Percent of Sales "
( 5 points )
2 . Overhead ( or Sales , General and Administrative Expense ) problem .
1992
1993
1994
Gross Profit Margin
40 %
39 %
41 %
Operating Margin ( NOI / Sales )
15 %
10 %
5 %
What is happening to S , G and A ( or overhead expenses )? Please set up
an illustration assuming sales of 1.00 dollar each year just as you did in
problem number one .
( 5 points )
3 . Balance Sheet Problem
1992
1993
1994
Annual Sales Growth ( over prior yr )
+ 1 %
0 %
+ 1 %
Current Ratio
3.5X
2X
1.2X
Average Collection Period
25 days 30 days 55
days
What is happening to liquidity ? Why ? What are some follow-up questions
your would ask ? ( 5 points )
4 . Using the data provided below , which is the better managed company ?
Why ? Please support your answers by calculating appropriate ratios . ( 5
points )
Company A
Company B
Sales
10 million dollars
20 million dollars
Net Income
1 million dollars
2 million dollars
Total Assets
10 million dollars
15 million dollars
Click the Assignment Files tab to submit your assignment .