In this case the concentration is on “Company Performance Measurement”, using the “Ratios”, before we answer to the question, we have to focus a bit on the “Financial Ratios” Sales Growth: The increase in sales over a specific period of time, often calculated annually.
In this specific Case, that has asked the Sale growth for the four-year period, can be calculated as bellow;
((Ending Value)/(Beginning Value) )^((1/(# of Year)) )-1
= ($244,000/$115,000) = (1+r) ^4 compound rate, = 21% Profitability Ratios: it shows how profitable the Company is;
Profits as a percentage of sales in 2008;
Income/Sale = 14000/244000=0.0573*100=5.73%
Profits as a percentage of sales …show more content…
The financial riskiness of SciTronics decreased between 2005 and 2008.
1. SciTronics held $133,000 of current assets at year-end 2008 and owed $48,000 to creditors due to be paid within one year. Its current ratio was 2.77 ( 133000/48000 ), a decrease from the ratio of 3.90 (82000/21000) at year-end 2005.
2. The quick ratio for SciTronics at year end 2008 was 2.16 (133,000-29,000)/48,000), a decrease from the ratio of 2.90 (82,000-21,000/21,000) at year-end 2005.
1. The improvement in SciTronics’ return on equity from 8.2% in 2005 to 18.7% in 2008 resulted from an increase in its return on sales; and an increase in its assets turnover, and an increase/decrease in its assets turnover, and an increase in its financial leverage.
Questions to Consider
1. What is your assessment of the performance of SciTronics during the 2005-2008 periods?
In looking at the firms’ assessment from 2005 to 2008, it can be concluded that the firm experienced rapid growth.
First, in terms of sales, the firm sales grew great by 21% from 2005 to 2008. In addition, the firm profits as a percentage of sales increased by 2.29% from 2005 to 2008. This means that firm has demonstrated its ability to increase its revenue while reducing its cost. Second, the firm saw its return on equity increased from 8.11% in 2005 to 18.66% increase. This is an increase of 10.56%. This