Finance

1.

Net Income / Net Sales = $27 / $795 = 3.4%

Gary and Company are generating a slightly higher return than the industry average of 3%. This allows Gary and Company to boast of a higher profitability to lure in future investors.

Interpretation: Good

2.

Net Income / Total Assets = $27 / $450 = 6%

Gary and Company is not producing as much income with the utilization of their assets. It is a full 3% lower than the industry average. It shows investors that they are not efficiently utilizing their assets.

Interpretation: Low

3.

Sales / Receivables = $795 / $66 = 12.05 times

Gary and Company is extending credit more than 7.5 times as often as its industry’s average. The company is seemingly collecting its money efficiently or they are receiving more cash than their industry competitors.

Interpretation: Good

4.

Sales / Inventory = $795 / $159 = 5 times

Gary and Company is turning its inventory over half as much as the industry average of 10 times. They are producing 1 item for every 2 of their competitors.

Interpretation: Poor

5.

Sales / Fixed Assets = $795 / $147 = 5.4 times

Gary and Company is using its fixed assets more efficiently than its competitors. Their fixed assets are used more than double of the industry average to help generate revenue.

Interpretation: Good

6.

Sales / Total Assets = $795 / $450 = 1.8 times

Gary and Company’s total assets are not as efficient as the industry’s average. The industry average is 3 times turnover while Gary and Company is only 1.8 times. Their total assets are not helping to generate revenue at a rate that keeps competitive and alluring to potential investors.

Interpretation: Low

7.

Current Assets / Current Liabilities = $303 / $111 = 2.7 times

Gary and Company fairs a little better in being able to cover their short-term debts compared to the industry average. Gary and Company covers their debts 2.7 times compared to the industry average of 2 times.

Interpretation: Good...