The company performed better than the industry in gross profit ratio and net profit ratio, but worse in liabilities to equity, current ratio, and quick ratio. To improve, the company could increase sales or decrease costs to raise profit ratios, sell assets to lower debt-to-equity, and boost current ratios by increasing cash flow from sales and reducing short-term expenses.

1. Ratio Analysis Question 10

2. RATIO 2009 Industry
Performance
Gross Profit Ratio 75% 70%
Money left over after sales less the cost of goods sold. It is the profit before all other
expenses.
A high percentage is good, and a low percentage is bad
Ways to improve include: increase the selling price/sales or decrease the cost of
purchases
Net Profit Ratio 22% 21%
The final profit left over at the end of the accounting period. It takes into account
everything. The higher the percentage the better
strategies to improve include: cutting down specific expenses or increase sales
Liabilities to Equity 68% 15%
Shows the percentage of total debt within a business to assets
The lower the percentage the better it is for a business, the higher the percentage the
more debt the business has
Strategies to improve; selling assets, look to increase sales and decrease expenses
Current Ratio 7.6 3.1
Expressed as a decimal and shows how many times current assets are bigger than
current liabilities. The higher the decimal count, the better it is for the business. Anything
that is current is considered short term. Cash etc
Strategies to improve the current ratio, selling assets, look to increase sales and
decrease expenses
Quick Ratio 5.0 9.2
The ability of the firm to cover short term debts without the need to sell stock. Written as
a decimal. The higher the better.

3. Question
 Using the ratios, analyze the profitability
and financial stability of the business
 Recommendations should be made to help
improve the business’s performance.
 Expected Response 300 words