6-1 Final Project Milestone Three: Ratio Analysis Report Draft PDF

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6-1 Final Project Milestone Three: Ratio Analysis Report Draft...

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ACC 307 Final Project Part II: Ratio Analysis Report Kayla Lopez Southern New Hampshire University

Ratios represent the relationships between items on the financial statement. Ratios analysis are essential for understanding financial statements, by providing perspective into a company’s liquidity and profitability. This report will focus on the years 2015-2017 by observing each year’s data & comparing them, with emphasis on the quick ratio, gross margin, net margin & return on equity. Peyton Approved has a net income of $83,642.39, total assets are $176,236.14, total liabilities is $82,593.75 & total equity is $93,642.39. On the income statement, a total revenue of $370,875.00, a gross profit of $217,715.00 and a total operating expense of $134,072.61 is shown. Return on equity has increased from 2015 to 2017, but the quick ratio, gross margin, and net margin have all decreased. Comparison Ratios:

Quick Ratio

2017 1.84

2016 2.2

2015 2.8

Industry Standard 1.75

Gross Margin

.58

.55

.7

.7

Net Margin

.23

.22

.32

.24

Return on Equity

.89

.9

.78

.8

The company performance of return on equity, quick ratio, gross margin, & net margin is between increase & decreases that are up & down. On the side of liquidity, the company increased its debts relative to assets. The details show that there is definitely room for improvement in the three of the categories. The completed analysis of Peyton Approved shows that it is a strong business.

References Wahlen, J. M., Jones, J. P., & Pagach, D. P. (2017). Intermediate accounting: Reporting and analysis (2nd ed.). Boston, MA: Cengage Learning....