Ratio Analysis Article

Topics: Financial ratios, Generally Accepted Accounting Principles, Financial ratio Pages: 4 (889 words) Published: September 29, 2012
Baderman Island Resort Financial Summary – Group C
Jana Davis, Cat Capra, Liz McCaw, Elly Ponce, Raymond Robinson, Richard Rasmussen, Sam Mason
Principles of Accounting II
July 14, 2012
Lori McKinney

| Baderman Island Resort|
To:CEO of Baderman Island Resort
From:Team C
Date: [ 7/16/2012 ]
Re:Ratio Analysis Memo
CEO of Baderman Island Resort,
In the evaluation of liquidity ratios, the revenue from the income statement finds the Tenney at Night to be the most profitable and the Kayfe as the least profitable. The balance sheet states the Morgan Bistro has the best debt to asset ratio of 12.18% and the Kayfe with the highest debt to ratio of 26.49%. The balance sheet also states the Kayfe has the lowest times interest earned ratio of 5.91 and the Morgan Bistro with the highest times interest earned ratio of 14.33. The current ratio is 1.00 and the quick ratio is 0.11. Total asset turnover is 6.21. In the evaluation of profitability ratios for 2004 the total assets were 137,598, return on assets of 1.86, and retained earnings of 72,343. For 2005 the retained earnings is 328,524 with average equity of 200,433. The return on equity is 1.28. The net income after taxes was 256,181. In evaluating the solvency ratios

In the evaluation of the horizontal analysis the total current assets shows a decrease in 2005 of about $60,000 but increases by $44,000 in 2006, a difference of $16,000 from 2004. Investors and creditors will show interest in the probability ratios. Investors and creditors will want to know if Baderman Island Resort is profitable. Investors want a return on their investment. I believe investors will continue to invest in Baderman Island Resort. Creditors, such as banks, will show interest in the liquidity ratios. Creditors want to ensure that Baderman Island Resort will be able to repay their obligations to short term debt. I also believe that employees and management would also be interested in the liquidity...
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