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Topics: Asset, Balance sheet, Inventory Pages: 5 (668 words) Published: June 23, 2013
B. Activity Ratio
i) Inventory Turnover = Cost of Goods Sold
Inventories

Year 2009

Inventory Turnover = Cost of Goods Sold
Inventories

= 79.6
60

= 1.32 times.

Comment: This ratio indicates that Aeon Company does not have an overstocking problem. A high turnover indicates great sales and hence exceeding their inventory. In year 2009, Aeon Company had restock their inventory for 1.32 times.

Year 2010

Inventory Turnover = Cost of Good Sold
Inventories

= 88.8
60

= 1.48 times.

Comment: Compared to the previous year, 2009, Aeon has shown improvement in their inventory replacement with little change in their inventory turnover by 0.16 times. This reflects better performance in managing inventory than ever before.

Year 2011

Inventory Turnover = Cost of Goods Sold
Inventories

= 97.2
60

= 1.62 times.

Comment: With an increase of 1.62 times in inventory management of 2011, Aeon only slightly increased at where the differences between the year 2009 and 2010. This two years shows that there was a slight decline by 0.14 times, compared to the year 2009 which increased by 0.16 times.

Year 2012

Inventory Turnover = Cost of Goods Sold
Inventories

= 117.1
60

= 1.95 times.

Comment: As longer the time flows, Aeon had shown an increasing improvement in their inventory management as this is might due to the company strategy to effectively promoted their stock for sales by popularize their products.

Year 2013

Inventory Turnover = Cost of Goods Sold
Inventories

= 153.5
72

= 2.13 times.

Comment: For this year, the inventory management has increased with the 2:13 times drastically compared to the year 2011. This is because, Aeon has indicated that they want to be a top choice for customers by encouraging them consistently prefer to purchase their goods. Thus, they will often substitute products in their savings to meet the needs of consumers.

C. Leverage Ratio

i) Debt Ratio = Total Liabilities
Total Assets

Year 2009

Debt Ratio = Total Liabilities
Total Assets

= 676.3 x 100
984.1

= 68.7%

Comment: This above shows that Aeon Company has high borrowings in which 69% of its assets are financed by debt, while the remainder are financed by using shareholder’s equity. This means, although Aeon always keep changing their inventory but through acquiring their inventory they purchased inventory on credit.

Year 2010

Debt Ratio = Total Liabilities
Total Assets

= 759.7 x 100
1010.2

= 75.2%

Comment: Their debt had increased by 6.5% which indicates that they faced difficulty by showing that they often make purchases on credit with suppliers which lead to increasing amount of existing debt.

Year 2011

Debt Ratio = Total Liabilities
Total Assets

= 893.3 x 100
1175.5

= 76%

Comment: This percentages of 76% had worsen that their debt equation from years to years because the percentages had increased by 0.8%. Aeon would experience difficulty in raising additional borrowings. Undesired impact would might happen upon Aeon as they might not be able to pay back all the debtors on time.

Year 2012

Debt Ratio = Total Liabilities
Total Assets

=...
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