Ratio Analysis Of Brown Cup Coffee
Liquidity Ratio Current ratio depicts how the company’s ability to payback its current liabilities and current assets. In 2011 the ratio is at its highest of 3.32 since the company put in capital. During this year they tested the waters on whether they could pay off short term debt. It went on a decreasing rate from 2012 to 2014 but had a slight increased on 2015. During 2012 to 2014 the company is struggling to pay back its liabilities and assets while financial health was at risk because on 2014 it went below 0. The quick ratio measures a company’s ability to meet its short term obligations with its inventory. Its ratios of Brown Cup Coffee can compensate the current ratio if ever insolvency may occur because it can cover each value
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2011 has 0 in value because of 0 inventories bought during the year but high on Total Asset Turnover of 9.24 which means more revenue per peso of asset. This year is good for the company since they didn't spend for inventory but generated profit. 2012 is 8.04 in inventory turnover but 5.94 asset turnover which generated more inventory within the year but did not sell enough to almost compensate and equate both values. The company should formulate a strategy to be efficient of inventory so that it won’t be of loss thus an effective purchasing plan. Luckily, it recovered on 2013 and 2014 because inventory was maximizing to sales. The 2 years have a steady rate in Inventory turnover of 4.37, 4.56 from 2013-2014 and Asset turnover in 4.10, 4.41 from 2013-2014. These are good values since both ratios almost equate. On 2015 Inventory turnover increased by 2 points as well as Total Asset turn over by 1 point. Brown Cup’s inventory within the year was of excess by 1 point. It should have an almost equal value to achieve efficiency nevertheless, sales were high.
Debt …show more content…
It is fluctuating every year since the uncertainty of both values divided in the equation. In 2011 it’s 0.30 since expenses increased versus sales, in 2012 it’s 0.32 since revenue increased versus expenses and in 2013, 2014, 2015 expenses got higher versus revenue which indicates a decreasing ratio. Operating Profit margin is at its highest at 2012 because operating expense is low to compensate sales with 30% of profit in every peso of revenue. It is decreasing in value from 2013, 2014 and 2015 since operating expense becomes
2011 has 0 in value because of 0 inventories bought during the year but high on Total Asset Turnover of 9.24 which means more revenue per peso of asset. This year is good for the company since they didn't spend for inventory but generated profit. 2012 is 8.04 in inventory turnover but 5.94 asset turnover which generated more inventory within the year but did not sell enough to almost compensate and equate both values. The company should formulate a strategy to be efficient of inventory so that it won’t be of loss thus an effective purchasing plan. Luckily, it recovered on 2013 and 2014 because inventory was maximizing to sales. The 2 years have a steady rate in Inventory turnover of 4.37, 4.56 from 2013-2014 and Asset turnover in 4.10, 4.41 from 2013-2014. These are good values since both ratios almost equate. On 2015 Inventory turnover increased by 2 points as well as Total Asset turn over by 1 point. Brown Cup’s inventory within the year was of excess by 1 point. It should have an almost equal value to achieve efficiency nevertheless, sales were high.
Debt …show more content…
It is fluctuating every year since the uncertainty of both values divided in the equation. In 2011 it’s 0.30 since expenses increased versus sales, in 2012 it’s 0.32 since revenue increased versus expenses and in 2013, 2014, 2015 expenses got higher versus revenue which indicates a decreasing ratio. Operating Profit margin is at its highest at 2012 because operating expense is low to compensate sales with 30% of profit in every peso of revenue. It is decreasing in value from 2013, 2014 and 2015 since operating expense becomes