Cis11 Assessment 1
Safety Styles Pty Ltd Financial Information
Ratios and Financial Data
Profitability 2010 2011 2012
Return on assets 30.2% 31.46% 31.48%
Return on equity 32.62% 34.02% 34.07%
Gross profit margin 57.55% 57.51% 57.93%
Net profit margin 16.04% 13.90% 14.35%
Efficiency
Asset turnover (times) 1.88 2.26 2.19
Inventory turnover (days) 95.62 90.55 95.10
Accounts receivable turnover (days) 50.37 42.66 45.16
Liquidity
Current ratio 4.12 4.1 3.91
Quick asset ratio 2.46 2.45 2.21
Capital Structure
Gearing ratio 2.37 2.36 2.54
Safety Styles Pty Ltd Application Decision
It would be my recommendation to grant Safety Styles their application for additional finance.
Profitability:
Safety Styles Pty Ltd has demonstrated in is able to generate and increase its profits as demonstrated through the healthy Gross and Net Profit Margins.
It should be noted during this three year period Safety Styles Pty Ltd has maintained and increased the Gross Profit margin, Safety Styles Pty Ltd has also maintained a healthy Net Profit Margin. Although dropping slightly the second year they have managed to improve this in their third year increasing their overall profitability
Safety Styles has also increased both its Return on Assets and Return on Equity, this demonstrates the ability of the company to efficiently make use of its assets and equity which ultimately reduces requirements for more funding and reduces cost making better use of what they currently have.
Efficiency:
Safety Styles Pty Ltd appears on average over the last three years to be improving its efficiency to make better use of their assets and turning over their inventory. Safety should also focus on this area and strive to improve their efficiency. Whilst the values may seem quiet higher their total sales amount has raised which may not be taken into account with averages.
Safety Styles may need to revisit their inventory strategy as their turn over period is quite high; this would be a benefit for
Ratios and Financial Data
Profitability 2010 2011 2012
Return on assets 30.2% 31.46% 31.48%
Return on equity 32.62% 34.02% 34.07%
Gross profit margin 57.55% 57.51% 57.93%
Net profit margin 16.04% 13.90% 14.35%
Efficiency
Asset turnover (times) 1.88 2.26 2.19
Inventory turnover (days) 95.62 90.55 95.10
Accounts receivable turnover (days) 50.37 42.66 45.16
Liquidity
Current ratio 4.12 4.1 3.91
Quick asset ratio 2.46 2.45 2.21
Capital Structure
Gearing ratio 2.37 2.36 2.54
Safety Styles Pty Ltd Application Decision
It would be my recommendation to grant Safety Styles their application for additional finance.
Profitability:
Safety Styles Pty Ltd has demonstrated in is able to generate and increase its profits as demonstrated through the healthy Gross and Net Profit Margins.
It should be noted during this three year period Safety Styles Pty Ltd has maintained and increased the Gross Profit margin, Safety Styles Pty Ltd has also maintained a healthy Net Profit Margin. Although dropping slightly the second year they have managed to improve this in their third year increasing their overall profitability
Safety Styles has also increased both its Return on Assets and Return on Equity, this demonstrates the ability of the company to efficiently make use of its assets and equity which ultimately reduces requirements for more funding and reduces cost making better use of what they currently have.
Efficiency:
Safety Styles Pty Ltd appears on average over the last three years to be improving its efficiency to make better use of their assets and turning over their inventory. Safety should also focus on this area and strive to improve their efficiency. Whilst the values may seem quiet higher their total sales amount has raised which may not be taken into account with averages.
Safety Styles may need to revisit their inventory strategy as their turn over period is quite high; this would be a benefit for