Joe’s Fly-By-Night Oil Company Essay Example for Free

Joes Fly-By-Night Oil Company Essay Prepargon a symmetry analysis for the fiscal stratum ended Dec 31, 2012. Organize your analysis per the following outline(1) Liquidity Current ratio 25,000/17,000=1.47%Quick ratio 25,000-17,000/17,000=25,000Comments on liquidity- The results cant really instruct how well or bad the union is doing until you compare it to another company. This ratio dishs show the ability to pay off short term obligations as they are due.(2) Asset management Total Asset turnover 10,000/40,000=.25Average collection period (ACP) 10,000/365=273,000/27=111 daysComments on asset management- Each $1 of asset is producing . 25 in sales. Using assest utilization shows why one firm turns over assests more rapied than another. Average collection period states that its pickings the customer around 111days to pay off their bills. This indicates how long sales stay on companys have gots.(3) Debt management Debt ratio 20,000/40,000=50%Times following earned 3,000/cc=15 timesComments on debt management- Times interest earned shows the number of times that income before interest and taxes covers the interest obligation . The higher the ration the stronger the interest paying ability of the firm .(4) Profitability Net profit margin1800/10,000= 18%-Return on Assets (ROA) 1800/40,000= 4.5%-Return on Equity (ROE) 1800/20,000= 9.0%Extended Du Pont equation .25x.18-0.045(4.5%)Comments on profitability to include your comments on the sources of ROErevealed by the Du Pont equationThese types of ratios indicate if the firm is making any money, and how much in relation to whats invested. They also give you an index number of how the firm is doing in controlling its costs.Net profit margin sales minus all expenses, including interest and taxes . So the net profit margin ratio measures the proportion of each sale dollar that remains after all expenses are paid for . Joes is at 18% .The ROA should be compared to past years ROA to run into wheather it is good or bad. The ROE is the bottome line which can be compared to other investments and see where they are. It evaluates the overtake the firm produces. The Du Point equation allows you to understand the source of return but it need to be compared to a similar industry to see truly where the company is.(5) Market value ratios PE ratio Market price of company stock /earnings per dower of stock 50.00/1.80=27.7 Market to book ratio Share price of stock/book value per shareTo get the book value per share you take total equity /common shares outstanding 20,000/1,000=20 then you take share price /book value per share 1.80/20=.09Comments on the market value ratiosThe M/B ratio gives you an indication of the value of a firms intangible non-listed assests. These numbers help you get an idea what it will cost you to get $1 of the firms assets. filiations market price represents how much investors are willing to pay instantly for that claim. I the M/B ratio is higher than 1.0 therefore , you ca n say that the value of the equity claim has gone up. If you look at the M/B ratio for Joes the equity claim has gone up since its at 27.2.For the purposes of this exercise, assume the following data for Joes Fly-By-Night OilStock price on Dec 31, 2012$50.00Number of common shares outstanding on Dec 31, 20121,000