DENVER MANUFACTURING CORPORATION

1
DENVER MANUFACTURING CORPORATION

• RATIO ANALYSIS

2
DIVISION A

• STRENGTHS
• WEAKNESSES
• Financial Statements

• Current Ratio of 2.67
• Quick Ratio of 1.59
• Avg. Days of Inventory of 60.38
• Debt to Asset Ratio of 41.85
• Return on Sales of 4.76
• Return on Assets of 0.15
• Return on Equity of 0.18
• Avg. Collection Period of 60.38 Days

3
DIVISION B

• STRENGTHS
• WEAKNESSES
• Financial Statements

• Debt to Asset Ratio of 22.71
• Return on Sales 9.08
• Return on Assets 0.23
• Return on Equity 0.22
• Avg. Collection Period of 41.39 Days
• Avg. Days of Inventory 60.11
• Current Ratio of 3.63
• Quick Ratio of 2.23

4
DIVISION C

• STRENGTHS
• WEAKNESSES
• Financial Statements

• Quick Ratio of 1.82
• Debt to Asset Ratio of 29.48
• Return on Sales of 9.7
• Return on Assets of 0.29
• Return on Equity of 0.30
• Avg. Collection Period of 39.67 Days
• Avg. Days of Inventory of 61.81
• Current Ratio of 3.07

5
COMBINED DIVISIONS

• STRENGTHS
• Financial Statements

• Quick Ratio 1.84
• Debt to Asset Ratio 30.7
• Return on Sales 7.93
• Return on Assets 0.22
• Return on Equity 0.24
• Avg. Collection Period of 42.13 Days
• Avg. Days of Inventory of 60.77

6
RATIOS COMPARISON
Division A Division B Division C Consolidated
Current Ratio 2.67 3.63 3.07 3.06
Quick Ratio 1.59 2.23 1.82 1.84
Debt to Asset Ratio 41.85 22.71 29.48 30.70
Return on Sales 4.76 9.08 9.70 7.93
Return on Assets 0.15 0.23 0.29 0.22
Return on Equity 0.18 0.22 0.30 0.24
Average Collection Period 45.63 41.39 39.67 42.13
Average Days of Inventory 60.38 60.11 61.81 60.77
7
COMPARISONS
8
AREAS NEEDING IMPROVEMENT

• Current Ratio
• The ratio is too high, meaning more profit should
  be earned on the current assets.
• Solution Improve cash management.