Defining Financial Ratios: Kudler Fine Foods

Defining Financial Ratios
Michael Turner
BSA/500 – Business Systems I
August 11, 2013
Simon Chen

The concept of forecasting financials is as much about calculating the data is its about understanding the data. A simple concept of calculating the larger perspective for a simple index can be the keys to understanding the direction of the company. Calculating that direction will help those who associate with the company as owners, lenders, and board members to know if the company is credit worthy, turnaround on accounts receivables, and the long term financial health of the company.

Definitions

Current Ratio – this measures the extent to which current assets are available to meet current liabilities (current meaning due within the next 12 months). Current ratio indicates whether the
Kudler Fine Foods

Kudler Fine Foods specializes in everything about gourmet food and gourmet cooking. Besides stocking and selling the freshest ingredients Kudler also stocks many tools gourmet cooks need all at reasonable prices.

Kudler Fine Foods | | Sales | Current Assets | Current Liabilities | Formula | Current Ratio | Current Ratio | 2003 | $ 10,804,000 | $ 1,971,000 | $ 116,290 | 10804000 / 1971000 = | 16.95 |

Kudler’s current ratio (2003) is 16.95.

Kudler Fine Foods | | Total Debt | Total Assets | | Formula | Debt Ratio | Debt Ratio | 2003 | $ 746,290 | $ 2,675,250 | | 746290 / 2675250 = | $ 0.28 |

Kudler had $0.28 of debt for every dollar of its assets (2003).

Kudler Fine Foods | | Net Income | Sales | | Formula | Profit Margin | Profit Margin | 2003 | $ 676,795 | $ 10,804,000 | | 676795 / 10804000 = | 6% |

Kudler made a little over $0.06 profit for every dollar in sales