The Report Focus on the Financial Statement Analysis of Tick-Tock
The report focus on the financial statement analysis of Tick-Tock during 2005 to 2007.And at the same time provides the recommendation whether to purchase Tick-Tock for $275,000 or continue looking for another business. This financial statement has been divided into three segments: profitability, liquidity and financial stability .The first part is profitability which focuses on different aspect of return on investment & evaluating operating performance ratios. And the second segment concrete on the liquidity, as this ratio measures a company's ability to pay short-term obligations, the current ratio of 2007 shows that the firm has a good short-term financial strength to meet its current liabilities. The third part illustrates the financial stability of Tick-Tock Company, which indicates the proportion of assets provided by creditors became more during the two years.
Probability
From the analysis of the data provide, we can know that the return on total asset ratio of 2005 is 37.36%, but in 2007 is 26.06%, the ratio has decreased by 11.3%.This means that the company become less profit. The return on ordinary shareholders’ equity ratio also decreased from 32.82% of 2005 to 24.17% of 2007, this ratio measures the return earned on assets provided by owners, and the decreased ratio indicates the company using the shareholder’s equity low efficient. These two ratios indicate that the business is making less profitable return on their borrowed money during 2005 to 2007. From the horizontal analysis which begins with the monetary amount change, we can see that compared to 2006, in 2007 net sales decreased by 2.21%, which leads directly to gross profit dropping by 4.35%.And the ratio also shows that although the profit after tax has increased from 2005 to 2006, and then decreased in 2007. As the dividend payout ratio measures the percentage of profits paid out to ordinary shareholders, a 148% dividend payout ratio in 2007 indicates the business paid more than one time
Probability
From the analysis of the data provide, we can know that the return on total asset ratio of 2005 is 37.36%, but in 2007 is 26.06%, the ratio has decreased by 11.3%.This means that the company become less profit. The return on ordinary shareholders’ equity ratio also decreased from 32.82% of 2005 to 24.17% of 2007, this ratio measures the return earned on assets provided by owners, and the decreased ratio indicates the company using the shareholder’s equity low efficient. These two ratios indicate that the business is making less profitable return on their borrowed money during 2005 to 2007. From the horizontal analysis which begins with the monetary amount change, we can see that compared to 2006, in 2007 net sales decreased by 2.21%, which leads directly to gross profit dropping by 4.35%.And the ratio also shows that although the profit after tax has increased from 2005 to 2006, and then decreased in 2007. As the dividend payout ratio measures the percentage of profits paid out to ordinary shareholders, a 148% dividend payout ratio in 2007 indicates the business paid more than one time