Joe’s Fly-By-Night Oil Company Essay

Prepare a proportionality analysis for the fiscal year end declension 31, 2012. Organize your analysis per the hobby out key out(1) Liquidity Current balance 25,000/17,000=1.47%Quick symmetry 25,000-17,000/17,000=25,000Comments on liquidity- The results lean re wholey bump how well or bad the comp any is doing until you compare it to other go with. This ratio helps show the ability to mesh off short term obligations as they are due.(2) Asset management join Asset turn over 10,000/40,000=.25Average ingathering extremity (ACP) 10,000/365=273,000/27=111 old ageComments on asset management- Each $1 of asset is producing .25 in gross trades. Using assest employment shows why one firm turns over assests more rapied than another. Average collection period states that its taking the customer some 111days to pay off their bills. This indicates how long sales stay on companys discussions.(3) Debt management Debt ratio 20,000/40,000=50%Times busy maneuver in 3,000/200=15 timesComments on debt management- Times lodge iningness earned shows the digit of times that income before interest and taxes covers the interest obligation . The higher the ration the stronger the interest paying ability of the firm .(4) positiveness Net profit bank1800/10,000= 18%-Return on Assets (ROA) 1800/40,000= 4.5%-Return on Equity (ROE) 1800/20,000= 9.0% panoptic Du Pont equality .25x.18-0.045(4.5%)Comments on profitability to hold your comments on the sources of ROErevealed by the Du Pont comparabilityThese types of ratios indicate if the firm is making any money, and how much in relation to whats invested. They in like manner give you an interpretation of how the firm is doing in controlling its costs.Net profit margin sales minus all expenses, including interest and taxes . So the net profit margin ratio measures the proportion of each sale dollar that remains after all expenses are paid for . Joes is at 18% .The ROA should be compared to past years ROA to det ermine wheather it is good or bad. The ROE is the bottome line which can be compared to other investments and translate where they are. It evaluates the return the firm produces. The Du Point equation allows you to understand the source of return still it need to be compared to a quasi(prenominal) industry to see truly where the company is.(5) foodstuff entertain ratios PE ratio Market price of company bear /earnings per portion of stock 50.00/1.80=27.7 Market to book ratio Share price of stock/book value per piece of groundTo desex the book value per share you take total integrity /common shares great 20,000/1,000=20 then you take share price /book value per share 1.80/20=.09Comments on the commercialize value ratiosThe M/B ratio gives you an indication of the value of a firms intangible non-listed assests. These numbers help you regain an idea what it will cost you to dismount $1 of the firms assets. agate lines market price represents how much investors are unbidd en to pay today for that claim. I the M/B ratio is higher than 1.0 hence , you can say that the value of the equity claim has gone up. If you look at the M/B ratio for Joes the equity claim has gone up since its at 27.2.For the purposes of this exercise, assume the following entropy for Joes Fly-By-Night OilStock price on Dec 31, 2012$50.00 calculate of common shares outstanding on Dec 31, 20121,000