Option #2: Understanding Financial Ratios for a Small Business
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.
Locate a small business where you can access the financial statements or use your own small business.
Using these financial statements, 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
Average 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 improve the company’s financial performance in the future?
Your paper should be 3-5 pages in length and APA formatted.
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