Analysis of Denver Manufacturing Corporation

1. Analysis of Denver Manufacturing Corporation A Charley Connolly Presentation

2. Division A • The current ratio of 2.85 to 1 is good because it means they have more assets than liabilities while they are not wasting their resources • The quick ratio of 1.67 is also relatively good because the ratio should be near 1 to 1. This company therefore has more assets than inventory but not by much • The debt to assets ratio of 39.32% is pretty good. This is probably a small to medium risk. • The Return on Sales ratio of 6.63% is also pretty good because the company is making a return on sales while the inventory goes at a medium pace • The Return on Assets ratio of 14.75% is very good because they are making money almost 15% when they sell something • The Return on Equity ratio of 22.01% is also good • The Average Collection Period of 45 days is pretty good because it means it gives people time to pay but not enough time that the company cannot pay it’s bills • The Average Days of Inventory of 60 is a little high and might suggest that there is not a great demand for this product

3. Division B • The current ratio of 3.54 to 1 is good because it means they have more assets than liabilities while they are not wasting their resources • The quick ratio of 2.14 is also relatively good because the ratio should be near 1 to 1. This company therefore has more assets than inventory but not by much • The debt to assets ratio of 22.55% is pretty good. This is probably a small to medium risk. • The Return on Sales ratio of 9.46% is also pretty good because the company is making a return on sales while the inventory goes at a medium pace • The Return on Assets ratio of 18.26% is very good because they are making money almost 20% when they sell something • The Return on Equity ratio of 22.35% is also good • The Average Collection Period of 39.21 days is pretty good because it means it gives people time to pay but not enough time that the company cannot pay it’s bills • The Average Days of Inventory of 60 is a little high and might suggest that there is not a great demand for this product

4. Division C • The current ratio of 3.38 to 1 is good because it means they have more assets than liabilities while they are not wasting their resources • The quick ratio of 2.04 is also relatively good because the ratio should be near 1 to 1. This company therefore has more assets than inventory but not by much • The debt to assets ratio of 23.51% is pretty good. This is probably a small to medium risk. • The Return on Sales ratio of 8.96% is also pretty good because the company is making a return on sales while the inventory goes at a medium pace • The Return on Assets ratio of 17.18% is very good because they are making money almost 20% when they sell something • The Return on Equity ratio of 20.97% is also good • The Average Collection Period of 42.17 days is pretty good because it means it gives people time to pay but not enough time that the company cannot pay it’s bills • The Average Days of Inventory of 60.2 is a little high and might suggest that there is not a great demand for this product

5. Company • The current ratio of 3.22 to 1 is good because it means they have more assets than liabilities while they are not wasting their resources • The quick ratio of 1.93 is also relatively good because the ratio should be near 1 to 1. This company therefore has more assets than inventory but not by much • The debt to assets ratio of 27.74% is pretty good. This is probably a small to medium risk. • The Return on Sales ratio of 8.39% is also pretty good because the company is making a return on sales while the inventory goes at a medium pace • The Return on Assets ratio of 15.71% is very good because they are making money almost 20% when they sell something • The Return on Equity ratio of 21.74% is also good • The Average Collection Period of 41.17 days is pretty good because it means it gives people time to pay but not enough time that the company cannot pay it’s bills • The Average Days of Inventory of 60.2 is a little high and might suggest that there is not a great demand for this product

6. Graph of Ratios

7. Ratios