Question: You have been provided with the financial statements for Grannis Closet for the last three (3) years. Grannie is anxious that her net income has been decreasing, & she has employed you to provide a thorough analysis that will describe what is causing this drop in net income. You are also requested to make recommendations for the future. As part of your analysis, you are expected to;
(a) Compute ratios for the last two (2) years (2005 & 2006).
[A] Current Ratio
[B] Quick Ratio
[C] Accounts Receivable Turnover
[D] Days Sales in Receivables
[E] Inventory Turnover
[F] Days Sales in Inventory
[G] Debt to Equity Ratio
[H] Debt to Assets Ratio
[I] Interest Coverage Ratio
[J] Profit Margin
[K] Return on Assets
[L] Return on Equity
(b) Make common sized statements for the three (3) years.
(c) Make a trend analysis for both the balance sheet [classification totals only] & the income statement.
(d) Discuss the strengths and weakness of the organization that are discovered.
(e) Talk about your recommended future actions.