Provide 1 response to each student post. Each response should be 150 words each. Turnitin and Waypoint is being used to check for plagiarism and Please use APA format. Please pay close attention to...

Alexandria Parish

Discuss at least three potential issues in utilizing ratio analysis that you would share with your colleague. In addition, calculate a liquidity, profitability, and efficiency ratio from your Week Six company to demonstrate your observations.

Ratio analysis is an financial technique that companies use in order to see the trends within their companies. When using ratio analysis s company must have the most accurate information in order to compare their numbers. One of the issues when using ratio analysis is making sure that all the numbers and data obtain is correct and accurate. Without the accurate information an analysis would not get the correct ratios they seek. Another potential issue is that one could easily get lost when examining ratios and overall lose the primary objective. When using ratio analysis we must remember that we only use the information track when the company is have a good day. Meaning we would have to predict that the company is having a good day everyday.

Carter's Ratio

Current Ratio: 1,042,958/327,421= 3.18

Net Profit: 282,068/3,462,269=0.08*100= 8.14

Efficiency: 3,462,269/2,058,858= 1.68

References:

Byrd, J., Hickman, K., & McPherson, M. (2013). Managerial Finance [Electronic version]. Retrieved fromhttps://content.ashford.edu/

Shane Barry

There are many tools that people will use to analyze financial statements. Although all information about a company can help with making financial decisions it is important not to get too caught up in one single set of numbers. Ratio analysis is a popular tool and can be used to visualize and extract information from financial statements. It focuses on ratios that reflect the profitability, efficiency, financing leverage, and other vital information about a business. The ratios can be used for multiple forms of analysis and can be a great tool to determine the health of an organization. However, it should not be the only means of judging a the health of an organizations finances because there are issues that are often overlooked and not captured in a specific or nonspecific ratio.

Some potential issues that can be arise is not knowing the historical information or background of an organization and these factors may greatly impact the ratio and may provide you with inaccurate figures. We may also have had different strategy changes or operational changes that may impact the ratios, possibly temporarily, that may need to be factored into the analysis. Another key factor to take into consideration is the market and competition as it may not be interpreted into the ratios, for example if we look at companies like Best Buy that are struggling to keep up with the online retailers and with the retail industry dwindling if we were to look at ratios now it may not take into consideration the changes in the industry or the impact that the changing industry will have on the company moving forward.

To determine ratios for different element of an organization there are formulas that are used to calculate ratios. For liquidity (quick ratio) current assets -inventory/ current liabilities, so for Apple (2018 annual report) we would plug in 131,339- 828/ 116,866= 1.11%. For profitability we would be net income/revenue- 59,531/41,304= 1.44. For efficiency ratios cost of goods/inventory- 102,519/ 14,473= 7.03. According to the numbers it appears that Apple is a healthy organization but this is also something we are all well aware of and we know that their marketing strategy and technology advancements will keep them relevant for years to come

References