Financial Forecasting Problem Instructions
Assume that you are the company CEO or at least in a position to effect whatever decisions you feel are necessary for this company. Based on the analysis you prepared of the provided four years of income statement and balance sheet information, project the fifth year for this company and compute the fifth year ratios. You may add any other ratios you feel are relevant.
Prepare a written analysis of the financial results you predict for fifth year using the ratios you have computed. Describe the reasons on which you based your projections and explain what you expect as a result and what management should do going forward.
2011 2012 2013 2014 2015
Return on Sales 0.03 0.03 0.030.03 ?
(Net Profit Margin)
Return on Equity 0.08 0.14 0.22 0.3 ?
Average Collection Period 30.4 30.430.4 30.4
(Days Sales Outstanding) ?
Inventory Turnover 6 6 66 ?
Current Ratio 3.33 1.9 1.54 1.33 ?
Quick Ratio 1.33 0.7 0.54 0.45 ?
Debt to Equity 0.25 0.7 1.8 2.76 ?
Fixed Asset Turnover 8 16 9.93 11.75 ?
Paper should be 2 to 3 pages, not counting the ratios and computations.