Prepared for: Management of Snags Ltd
Table of Contents
Return on Equity Ratio6
Return on Assets Ratio6
Asset Turnover Ratio7
Inventory Turnover Ratio7
Account Receivables Turnover Ratio8
Gross Profit Margin9
Net Profit Margin9
Gearing Ratio (Debt to Equity Ratio)11
Conclusion and Recommendations12
John Watts (JW) prepared this report in response to a request by the management of Snags Ltd (Snags). The purpose of this report is to provide insight into the performance of Snags Ltd over the last three years.
Findings presented in this report were based on analysis conducted over the past three year’s annual reports issued by Snags Ltd. Performance analysis was based on the key financial ratios; profitability, efficiency, liquidity and capital structure.
JW believes that in the past three years Snags performed worse than the industry across most metrics analysed and with such a performance the company cannot remain competitive in the market.
Snags Ltd is an 80 year old company engaged in a number of businesses in Australia. The company listed on the stock exchange in 2005 and has operations in a number of businesses manufacturing bacon, ham and smallgoods. . Snags Ltd is one of the top five manufacturers in the industry. Over last 15 years, the company has been witnessing tough times as the established product line of smoked hams and traditional smallgoods has been a shrinking part of the overall sales. The company is looking for ways to expand its business and grow further.
Table 1 highlights the ratio analysis and helps to understand, assess and compare the performance of the company and to respond accordingly by coming up with...