A management analysis for Peyton Approved Company PDF

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Financial analysis for Peyton Approved Company. It has all the financial reports and summuries...

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A management analysis for Peyton Approved Company. The year 2017 compared to 2016 shows to be financially profitable and in a good health position. However, Return on Equity and return on assets have decreased in 2016 and 2017. The ratio of 1.09 in 2016 to 1.02. The following calculations will show how Peyton Company has a strong company in which has a positive health rating. The first Ratio we will look at for Peyton is the Current Ratio: = Current Assets / Current Liabilities. In 2016, the ratio was 5.18 and had an increase in 2017 to 5.96. This signifies the company’s ability to meet their short-term obligations. The account receivable turnover ratio determines how well the company collects receivables and liquidates them into cash. To calculate Accounts Receivable turnover, you take net sales and divide by accounts receivable. In 2017, Peyton had an Accounts Receivable turnover of 5.04. On the other hand, there is also Inv. Turnover Ratio: This depicts how many times the inventory sold during the specified period. In 2017, the inventory turnover was 10.2.

The gross margin determines how profitable a company is. This can be calculated by taking the company’s gross profit and dividing it by total revenue. In 2017, Peyton had a gross margin of .68. This is a positive margin. This shows how well a company is managed. A high gross profit margin is considered to suggest that management is doing an effective job creating revenue while minimizing cost associated with production and labor.

When evaluating the health of the company, it is important to understand how certain ratios can determine overall health. For Peyton, over the past 2 years according to their current ratio of 5.96 is considered to be doing very well. A company in which has a ratio below 1 is considered to be unhealthy due to its ability to pay its liabilities. This is also not positive to potential investors and shareholders. When looking at Peyton’s operating margin comparing 2016 and 2017, we can see how efficient the company is. This is a key indicator on how management is able to control cost. This is calculated by taking the company’s profit margin and subtracting its variable costs associated with production and marketing of products and services. In conclusion, I believe Peyton has a strong management team with positive growth within a stable environment....