Cc California Choppers Ratios

Exhibits and Data Analysis

CALIFORNIA CHOPPERS RATIO TABLE

2001 2002 2003 2004 2005 Ind.Av.

Liquidity

Current Ratio 1.37 1.48 1.64 1.33 1.04 1.25

Cash Ratio 0.19 0.20 0.31 0.25 0.15 0.27

Asset Management

Inventory Turnover in Days 138.26 59.54 51.70 33.03 43.66 44.12

A/R Turnover in Days 59.16 42.69 39.28 42.69 42.30 32.45

A/P Turnover in Days 157.33 80.75 71.71 79.18 109.94 60.23

Cash Conversion Cycle 40.09 21.48 19.27 -3.46 -23.98 16.35

Fixed Assets Turnover 1.85 3.94 4.46 4.46 4.05 3.72

Total Asset Turnover 0.95 1.88 2.03 2.17 2.00 2.05

Long-term Debt Paying Ability

Debt Ratio 0.93 0.84 0.73 0.64 0.65 0.54

Times Interest Earned 1.23 2.62 3.54 3.42 3.06 9.33

Profitability

Gross Margin 30% 30% 29% 27% 26% 32.00%

Operating Profit Margin 5% 13% 11% 8% 5% 14.00%

Net Profit Margin 0.65% 5% 5% 4% 2% 8.50%

ROA 3.3% 16% 15% 11% 6% 17.46%

ROE 9% 63% 41% 22% 12% 38.25%

ANALYSIS OF ROE— 5-WAY

EBIT/Sales EBT/EBIT NI/EBT Total Asset Turnover Debt Ratio ROE

2001 0.0514 0.19 0.679 0.95 0.93 0.09

2002 0.128 0.618 0.68 1.88 0.84 0.63

2003 0.1102 0.718 0.68 2.03 0.73 0.41

2004 0.075 0.708 0.68 2.17 0.64 0.22

2005 0.046 0.673 0.68 2.00 0.65 0.12

According to the formulas given by the case we can calculate the data, take year 2001 as example:

Current ratio is a measure of short-term liquidity. A high current ratio generally indicates that the ability of short-term solvency is better. But if the ratio is too high, it will affect the efficiency of using firms' capital and ability of getting benefits. According to the current ratio of California Choppers, the current ratio is a little higher than the industry, and it increased from 2001 then dropped down from 2003. This indicates the firm has a good short-term solvency and a lower liabilities.

Current ratio=current assets/current liabilities=148.76/108.82=1.37