The Financial Performance of Seward Inc - Assignment Example

The Financial Performance of Seward IncThe financial performance of Seward Inc. is analyzed based on the financial statement of the company. The Ratios related to the profitability, Liquidity, efficiency and leverage of the business are calculated to gather the overview of the health of the company and its performance in the year 2013 (Knight and Bertoneche). The company ratios are compared with the Industry wide ratios, in order to get the idea of how the company is working in the market. The Liquidity ratio of the company is below the Industry ratio, which means that the company is less liquid i.e. the company must raise the liquidity in order to gain trust of the creditors.

The liquidity ratio shows the capability of a company to pay off its current liabilities. The company is lacking in the days in receivables and days in inventory compared to the Industry ratios. The company must be reduced in order to generate more efficiency in the processes. The Operating profit margin is less than the Industry margin this explains that the company is doing a good job. However, it is generating low return on its assets as it could be due to large value of assets employed as compared to the industry.

The company is relying on debt financing and the ratio of debt is higher than that of the industry (36%). The company must introduce Equity Financing. The equity is well organized by the managers and the returns generated are higher than the Industry average. Works CitedKnight, Rory and Marc Bertoneche. Financial Performance. Oxford: Butterworth-Heinemann, 2000.Appendix ARatios2013 Seward Inc.Industry RatiosCurrent ratio2.53.0Acid-test (quick ratio)1.3751.5Days in receivables48.6740Days in inventory 11770.

2Operating return on assets9.55%12.50%Operating profit margin11.1%8%Total asset turnover1.361.6Fixed-asset turnover3.463.10Debt ratio36%33%Times interest earned8.36.00Return on equity15%11%