Berry’s Bug Blasters
ACC 291 Ratio Analysis Memo (Week 5) Berry’s Bug Blasters University of Phoenix
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Berry’s Bug Blasters After analysis of Berry’s Bug Blasters, the liquidity, profitability and solvency ratios were examined. Our analysis is attached and we will offer our discovery about the company’s financial position, which may benefit from our analysis, and what our data will reveal about the company’s performance and position in this memo to the CEO. After using the horizontal and vertical analysis Berry’s Bug Busters was able to see how their assets and debts are handled in relation to profits. Liquidity within a business is the ability to pay current liabilities using current assets. Liquidity ratios are important to a company as well as employees, creditors and banks. As of 2008, Berry’s Bug Blasters holds a 15.88% debt to total assets ratio. Solvency is the long-term financial practicality of a business including its ability to pay off long-term obligations. Key solvency ratios are debt to equity ratio, debt to capital ratio, debt to assets ratio, times interest earned ration, and fixed charge coverage ratio. Profitability is the ability of a business to earn profit for its owners. Profitability ratios are determined through the analysis of asset turnover, profit margin, return on assets, and return on common stockholders’ equity. In 2008 every dollar of asset owned Berry’s Bug Blasters sold $1.68 of goods and services. The profit margin is 6.58%; the
return on assets showed the company received $25.52 profit off every $100 in assets, and stockholder’s equity showed a 3.7%. The collected data shows what kind of financial place the company is at. These ratios are important for investors and lenders to see how the company is operating and handling their assets. The ability...