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Denver Manufacturing Company Ratio Analysis. Division A Division A Division A’s ratios for the year ending December 31, 2001, exemplify its importance.

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Presentation on theme: "Denver Manufacturing Company Ratio Analysis. Division A Division A Division A’s ratios for the year ending December 31, 2001, exemplify its importance."— Presentation transcript:

1 Denver Manufacturing Company Ratio Analysis

2 Division A Division A Division A’s ratios for the year ending December 31, 2001, exemplify its importance to the success of our company: A) Current Ratio 2.85 B) Quick Ratio C) Debt to Asset Ratio D) Return on Sales (Profit Margin) E) Return on Assets F) Return on Equity G) Average Collection Period 45 H) Average Days of Inventory 60

3 Division A Division A (continued) Strengths: –Division A’s debt to asset ratio shows success in minimizing debt. In addition, they have a reliable return on assets,13%, for our company. Weaknesses: –Division A has a high number for average periods for inventory and collection. However, this is not surprising because our company accommodates the needs of our customers and makes sure to stock warehouses.

4 Division B Division B’s Division B Division B’s ratios for the year ending December 31, 2001, exemplify its importance to the success of our company: A) Current Ratio B) Quick Ratio C) Debt to Asset Ratio D) Return on Sales (Profit Margin) E) Return on Assets F) Return on Equity G) Average Collection Period H) Average Days of Inventory

5 Division B Division B (continued) Strengths: –Division B’s average collection period is less than that of Division A, bringing with it a greater confidence that the branch will collect what is owed to them. It’s current ratio is well over 1, indicating that they are conservative in assuming debt.Division B’s Division A Weaknesses: –Because Division B has very little liabilities, it may not be operating at full potential.Division B

6 Division C Division C’s ratios for the year ending December 31, 2001, shows its importance to the success of our company.Division C’s A) Current Ratio 7.3 B) Quick Ratio 5 C) Debt to Asset Ratio.17 D) Return on Sales.14 E) Return on Assets.28 F) Return on Equity.31 G) Avg Collection Period 72 H) Avg Days of Inventory 68

7 Division C Division C (continued) Strengths: –Division C’s current ratio indicates a very conservative approach to assuming debt; therefore, the company is assured that they are not taking out unnecessary loans. They have a good return on sales and assets in comparison to the other 2 divisions.Division C’s Weaknesses: Division C is not making use of its debts, and thus is not operating at its full potential. In addition, their average collection period is shockingly high.Division C

8 Denver Manufacturing Company’s Complete Analysis: In the final analysis, the company as a whole is proud of their growth and success. Each division contributed to Denver’s success, and we are proud to display our ratios for the year ending December 31, 2001 A) Current Ratio B) Quick Ratio C) Debt to Asset Ratio D) Return on Sales (Profit Margin) E) Return on Assets F) Return on Equity G) Average Collection Period H) Average Days of Inventory

9 Denver Manufacturing Company’s complete Analysis: Strengths: –The corporation maintains a high quick and current ratio, showing our sophisticated and conservative approach to assuming unnecessary debt. Also, we have a decent return on assets. Weaknesses: –The corporation could make better use of its debt, and we could even further success by increasing our return on sales.

10 Ratios for Divisions A-CDivisions A-C Here are select ratios for the 3 divisions of our company.


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