| Financial Leverage: Return on sales: net income/sales | 2020 | 2019 | The return on sales decreased since 2019 as the net income drastically decreased it became negative which means their income was less than what they could make in 2020 comre to 2019 where they they had about 1 pecent retrn on their sales |
| Net Income | -[$$]715,000.00 | [$$]881,000.00 |
| Sales | [$$]4,307,000.00 | [$$]9,452,000.00 |
| Return on Sales | -[$$]0.17 | [$$]0.09 |
| Financial Leverage: Asset turnover= sales/total sales | 2020 | 2019 | While they had almost same amount of assets in 2019 and 2020, but their sales decreased in 2020 comre to the other year. They stated that their sales decreased due to the COVID pandemic. |
| Sales | [$$]4,307,000.00 | [$$]9,452,000.00 |
| Total asstes | [$$]16,755,000.00 | [$$]14,957,000.00 |
| Asset turnover | [$$]0.26 | [$$]0.63 |
| Financial Leverage: Return on assets=net income/total assets | 2020 | 2019 | As the net incmoe decreased and became negative while they had almost same amount of assets, their return on their assets became negative in 2020. The covid caused them to face with low income and most of their rooms were unoccupied in 2020 compare to 2019. |
| Net income | -[$$]715,000.00 | [$$]881,000.00 |
| Total Assets | [$$]16,755,000.00 | [$$]14,957,000.00 |
| Return on assets | -4% | 6% |
| Financial Leverage: Average Assets /Average Equity | 2019 | 2020 | After calculating financial leverage for year 2019 and 2020 it is clear that the company is doing good as it is 0.7% meaning the lenders or investors are profiting their shares in the company where as if the Financial Leverage is more than 1% then the Investors will lose the profitable amount of money which puts company management in a bad shape as they will lose more lenders and shareholders. |
| Total Assets | 14,957,000 | [$$]16,755,000.00 |
| Total Equity | [$$]21,098,000.00 | [$$]21,284,000.00 |
| Average Assets | [$$]15,856,000.00 |
| Average Equity | [$$]21,191,000.00 |
| Financial Leverage | 0.7482421783 |
| Return on Equity: Return on Assets * Financial Leverage | 2019 | 2020 | Comparitively 2019 has more ROE 4.2% than 2020 where it is -3.12%. Which means returns for the common stockholders investment has been decreased over the previous year meaning the company is not generating good profitable amounts. In general 15-20% Return on Equity is measured as a good standing of a company on the returns. |
| Return on Assets | 6 | -4 |
| Financial Leverage | 0.70% | 0.78% |
| Return on Equity | 4.20% | -3.12% |
Gayathri2505
GroupD--ManagerialFinance-CV....2.xlsx
