FINANCIAL RATIO ANALYSIS OF A COMIC BOOK SALES PDF

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FINANCIAL RATIO ANALYSIS OF A COMIC BOOK SALES...

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Running head: COMIC BOOK SALES CASE

UNIVERSITY OF THE PEOPLE

FINANCIAL MANAGEMENT (BUS 5111) WRITTEN ASSIGNMENT UNIT 1 FINANCIAL RATIO ANALYSIS OF A COMIC BOOK SALES-

NOVEMBER 18, 2020

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COMIC BOOK SALES CASE

2 Introduction

This paper would discuss the financial ratio analysis of a Comic Book Company using ratios such as gross profit margin, current ratio, the debt ratios, assets yield and equity leverage ratio, as an indication of the companies financial capacity. Additionally, in achieving the financial ratio analysis of the Comic Book company, references would be made from the sales and balance sheet for the Exceptional Service Grading Company (Uopeople Written Assignment 1, 2020). Gross profit margin The gross profit margin ratio relates a company's gross profit to its net sales, indicating how much a company earns after the sale costs have been paid. Gross profit margin is the percent of revenues that remain after deducting the cost of goods sold (Calson, 2019). Gross profit is essential as it highlights how profitable the core business operations are without taking indirect costs into account. .From the following findings we will discover that the comic book is performing well and that gross profit money will be used to improve the cash flow, operate on other projects.

Gross profit margin = total sales (service contract revenue) – cost of goods sold (service contract cost) divided by the total sales. The Gross profit margin for 2017 and 2018 is calculated as below: Gross profit margin for 2017 =6595400 – 4957800/6595400

Gross profit margin for 2018 =9200000 – 6503100/9200000

= 25%

= 29.3%

COMIC BOOK SALES CASE

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Current ratio The current ratio is the most common liquidity measure. It decides whether the company has adequate short-term assets to pay short-term liabilities. It is a common method for assessing a company's short-term solvency status. The current ratio for 2017 and 2018 is determined using the following formula from balance sheet data: Current ratio = Current assets / current liabilities Current Ratio for 2017 = 4576900 / 3292850

Current Ratio for 2018 = 5652200 / 3325950

= 1.39

= 1.70

Debt ratio The debt ratio is a financial ratio that calculates the equity of a company. The debt ratio is defined as the ratio, as a decimal or percentage, of total debt to total assets. It can be interpreted as the proportion of assets of a business funded by debt. The Debt ratio for 2017 and 2018 is determined using the following formula from balance sheet data. Debt ratio for 2017 = 4067900/5875400

Debt ratio for 2018 = 4170300 / 7007800

= 0.7%

= 0.6%

Return on Asset The return on assets is a financial ratio that indicates how much a company can profit from its assets. Productive companies will benefit more from their assets, and ROA shows you how well an organization does that. The return on asset for 2017 and 2018 is determined using the following formula from balance sheet data.

COMIC BOOK SALES CASE

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Return on asset = net income / total asset Return on assets for 2017 = 454500/5875400

Return on Assets for 2018 =1330000/7007800

= 0.08

= 0.2

Debt to Equity ratio The debt to equity ratio reveals the relative proportions of debt and equity financing that a business employs. It shows the percentage of company financing that comes from creditors and investors. To calculate the debt to equity ratio I divided the total debt by Equity. The debt to equity ratio for 2017 and 2018 is determined using the following formula from balance sheet data. Debt to equity ratio for 2017 = 4067900 / 1807500

Debt to equity ratio for 2018 = 4170300 / 2837500

= 2.25

= 1.5

Conclusion To conclude, the outcome of the calculations of the above-mentioned ratios would allow investors to invest in the Comic Book Company since it is evident that the company has a strong financial portfolio. I personally think, the company performed well in 2017, despite 2018 having a good current ration, it is important to not that dividend where not paid then. Inclusion of the Return on Asset and the debt to equity ratio helped in indicating that the company is well prepared to invest in it. Reference Carlson, R. (2019, September 25). How Gross Profit Margin Reveals a Company's Financial Health. Retrieved from https://www.thebalancesmb.com/what-is-the-gross-profit-margin-393201

COMIC BOOK SALES CASE

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Heisinger, K., & Hoyle, J. B. (2012). Accounting for Managers. Retrieved from https://2012books.lardbucket.org/books/accounting-for-managers/index.html UoPeople Written Assignment Unit 1. 2020. BUS 5111 Financial Management. Comic book case study. Retrieved from https://my.uopeople.edu/mod/workshop/view.php?id=225802...