Understanding Financial Ratios (85 Points)
Financial plans and statements are an important part of identifying how much money is needed and of determining the health of the company through company valuation. Completing financial statements is part of the role of the entrepreneur in raising capital.
Reread “All is Not Paradise in Eden’s Garden,” parts 1 and 2, found at the end of subsection LO 4 of Chapter 11 in Essentials of Entrepreneurship and Small Business Management.
Assume the role of Shelly Edison. Using the financial statements for Eden’s Garden, calculate the following ratios:
- Current Ratio
- Quick Ratio
- Debt Ratio
- Times Interest Turnover Ratio
- Average Inventory Turnover
- Average Collection Period
- Average collection period in days
- Average Payable Period
- Payable period in days
- Net Sales to Net Assets
- Net Sales to Working Capital
- Net Profit on Sales
- Net Profit on Equity
What recommendations can you make to the Eden’s to improve their company’s financial performance in the future?
Your paper should be 3 pages in length and in conformity with guidelines for APA Style. Calculations of the ratios should be shown in an appendix in APA format, while the body of the paper is used for explanations and recommendations.
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