Analysis Of Nano-Brewery

The following information will be for the benefit of the “nano-brewery”, in which financial ratios will be calculated and explained to help the stockholders proceed forward with their goals and gaining the understanding of the financial health of their operation. In addition to that information, market research has been conducted and suggestions on how to expand upon the existing products and services will be provided. Along with the expansion of the products and services, there are recommendations for achieving these strategic goals using the SMART goal methodology. Finally, details on how to communicate the goals to the existing team are given.
Financial Analysis
The financial ratios being conducted for this report have a primary focus on
This ratio is indicative that the company is in good standing to pay off all short-term liabilities if the situation became necessary. When looking at the results of a current ratio, a higher number is always more favorable. This tells us that the company can easily make payments on their current debt or liabilities (Current Ratio, 2018).
Net working capital: the net working capital indicates the actual capital on-hand that could be used to pay off current liabilities instead of showing a percentage of assets to liabilities. The type of ratio shows liquidity. Knowing this calculation is important because it shows the company’s ability to use its assets efficiently. It is important to note that if a company is unable to meet its short-term obligations with their current assets, they will be forced to use their long-term assets to meet said obligations, which the long-term assets are the profit producing assets. The calculation for net working capital is: Current Assets – Current Liabilities.
New working capital = $18,211 - $4,073 =
The higher this ratio is indicates that more financing comes from creditors than shareholders. The calculation for this ratio is Debt-to-Equity = Total Liabilities / Total Equity.
Debt-to-Equity = $43,236 / $26,419 = 1.6
This ratio indicates that most of the financing for the “nano-brewery” comes from creditors. Currently, with this ratio, creditors may few this as a risky investment. Typically, the debt-to-equity ratio result of 1 is preferred because it shows the creditors and investors each have equal stake in the operation. When it is higher than 1 it could appear to creditors that investors do not want to fund the business because it is not performing as well as it should or could financially. It is in my opinion, however, that with the recent surge in craft beer popularity and the increase in sales and popularity of this specific brewery, that this ratio would soon turn as it is capable to paying back