Ratio analysis - Coursework Example

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Debt management requires that in case of a lower ratio, more savings should be done. An increasing debt to equity ratio means that the company is being financed more by creditors’ more than internal cash flow. This…
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Download file to see previous pages Assets turnover ratio measures the amount of revenue generated from assets owned by the company. A decreasing trend because of reducing sales implies that promotions and advertising of sales must be done (Gibson and Gibson 187).
The debt to income ratio measures the level of total income to that of total assets of the company. The company’s increasing ratio of 0.01% means that the both assets and sales are on the rise. Debt to equity ratio increases in the current year which means a lesser risk to the potential shareholders of the company. The investment potential of the company is safer for the likely investors. Competitors in the same industry are competing fairly with the company. The higher the higher the interest cover means improved ability of the company to pay its obligations. The company has enough chance to bear the amount of its prevailing finance cost.
From its assets turnover ratio, the company is not optimizing the use of its assets. The company cannot generate more sales with any fewer assets. Decreasing asset turnover ratio means a negative impact on the return on equity (Gibson and Gibson ...Download file to see next pagesRead More
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