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Chapin Manufacturing Corporation

Chapin Manufacturing Corporation. Ratio Analysis 2000. Overview of Ratios. Division A - Analysis. Strengths: - Both the quick and current ratios indicate Division A can pay off debt with relative ease.

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Chapin Manufacturing Corporation

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  1. Chapin Manufacturing Corporation Ratio Analysis 2000

  2. Overview of Ratios

  3. Division A - Analysis Strengths: - Both the quick and current ratios indicate Division A can pay off debt with relative ease. - The average days in inventory is less than two of the other divisions, indicating an ability to move stock. Weaknesses: - The average collection period is longer than others, indicating an inability to collect on receivables.

  4. Division B - Analysis Strengths: - Division B has the smallest debt to asset ratio, indicating a relatively small amount of debt compared to assets. - Return on assets is higher than others. - The collection period indicates about a month, meaning they are collecting on receivables in a timely manner. Weaknesses: - The current ratio is a bit high in comparison with the other two divisions.

  5. Division C – Analysis Strengths: - A high return on sales indicates money is being made on the product. - A high return on assets indicates that assets are being used productively. Weaknesses: - The average day in inventory is a bit higher then the other two, indicating inventory may be sitting on the shelves. - The current ratio is a bit high, indicating a possible cash flow problem.

  6. Company Overview The three divisions of Chapin Manufacturing seem to compliment each other nicely. There is not much difference in many of the ratios from one division to another, indicating the company is unified and acting as a complete entity. Division B seems to be the strongest based on the ratios, but the others are not far behind. Division C needs to work on the average days in inventory to ensure that there is not an overabundance of product sitting on shelves. Division A needs to figure out a system of collecting in a more timely manner because their collection period is almost 7 days longer than the company average. This extra week could be costing them money in the long run. All three divisions appear to have good debt to asset ratios and similar return on sales.

  7. Selected Ratios

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