Key West Productions Ratio Analysis

1. Key West ProductionsRatio Analysis Steve Santora 18 April 2003 DIT 1006

2. Strengths and Weaknesses of Division A Current ratio- This division has poor cash management because it does not earn much return on its assets. It is above the industry average. Quick Ratio- This division is unable to pay its debt well. This ratio is below the industry average but is still the worst in the company. Debt to Asset Ratio- This division is very risky. It is well above the industry average. Return on Sales- This division has poor profitability. It is well below the industry average. Return on Assets- This division has the lowest return on assets in the company and is not even close to the industry average. This division is performing poorly. Return on Equity- This division performs well above the industry average in this category. It successfully leverages its debt. Average Collection Period- This division collects its AR in less time than the industry average. However, it is the worst within the company. Average Days of Inventory- This division is almost three times higher than the industry average. Therefore, it is having poor sales. It is also the worst within the company. Division A

3. Strengths and Weaknesses of Division B Current ratio- Division B has poor cash management. It is well above the industry average and is the highest in the company. Quick Ratio- Division B is better than the industry average but is still the worst in the company. Debt to Asset Ratio- This division assumes the lowest amount of risk in the company and is slightly below the industry average. Return on Sales- This division has decent profitability as it is about one percent lower than the industry average. Return on Assets- This division’s return on assets is just about half of the industry average and therefore is doing poorly. Return on Equity- This division leverages its debt well compared to the industry average but is still the worst in the company. Average Collection Period- This division does a great job of collecting money from its customers because it is well below the industry average. Average Days of Inventory- This division is having difficulty with sales because this ratio is about double that of the industry average. Division B

4. Strengths and Weaknesses of Division C Current ratio- Division C has a poor return on its current assets and therefore has poor cash management. Its ratio is above the industry average and average within the company. Quick Ratio- Division C is capable of paying its debt, however it is below the industry average. This ratio is about average within the company. Debt to Asset Ratio- Division C assumes a higher risk than the industry average but is average within the company. Return on Sales- Division C has a semi low profitability in comparison to the industry average. In terms of the company, Division C is average. Return on Assets- This division is not performing well with its resources when compared to the industry average. However, it is average within the company. Return on Equity- Division C leverages its debt well in terms of the industry average. However, it is average within the company. Average Collection Period- This division does a good job of collecting money from its customers. It collects the money faster than the industry average but it is average within the company. Average Days of Inventory- Division C sales are low due to this ratio being high. It is about double the industry average. However, it is average within the company. Division C and the company as a whole have the exact same ratios. Therefore the above analysis is true for both Division C and the entire company. Division C

5. Key West ProductionsRatios

6. Key West Productions