Reword so it doesn't look copied

2) Over the three-year time period the profitability of the company has increased from the year 2001 to 2002 and again fallen in 2003. This is because all ratios including the profit margin, return on assets and return on equity have followed the same trend and so has the return on equity as per the du pont analysis. This is due to a decrease in the net income in 2003 and an increase in 2002. the sales have an increasing trend over the years. The total equity and total assets have also increased over the years. The profits have fallen in 2003 due to an extraordinary loss of 170,000 resulting in low profits as compared to 2002. The operating profit before such extraordinary loss has an increasing trend over the three years. If this loss were to be not there, then the net income would have had an increasing trend from 2001 to 2003.

4) Now, after adding back the extraordinary loss in 2003 to arrive at the increased net income, we see that the profitability trend has changed, and it has become increasing from 2001 to 2003. All the ratios including profit margin, return on assets and return on equity are increasing from 2001 to 2003. This is because of an increasing trend in the net income along with an increasing trend in the sales. It was because of this extraordinary loss that the company had lower income in 2003. This shows consistency in company’s profits earnings.

5) The industrial ratios are smaller than the ratios analysed after the adjustments. For example, the ROE for the industry is at 9.8% whereas the analysis made the ratio is at 23%. The ROA is approximately 8% from the analysis whereas the industrial analysis records a mere 5.10%. The same happens to the profit margin. The same happens with the assets turnover which from the analysis 2015 records 1.43X while from the industry it is 1.33X the debt ratio is 0.62 from the analysis while the industrial analysis states 0.43. This indicates that the industrial ratios are slightly low.

6) The most utilized variable is the receivable turnovers indicating that the company is very flexible to collect its debt. This also implies that that the company s able to manage its credit sales more than any other asset it has. This is followed by the inventory which the company has been able to turn it round 4.75X. This implies that the company sales 4.75 times its initial stock which is somehow low. Lastly the company seems to have a poor management of the fixed assets because they have recorded the smallest ratio ever (Beaver, Correia & McNichols, 2012). The total assets ratio from the calculations stands at 1.43x while from the industrial analysis the ratio stands at 1.33X. Looking at the fixed assets turnover the ratio is 2.77X indicating that the fixed assets contribute more to the sales that the company makes compared to the current assets. This is an indication that the company should invest more in the fixed assets and not the current assets as it is the case at the moment.

7)

In my opinion Becky Harrod has a legitimate complaint on the over prime charge being issued to his company for the loan because looking at the trends in the financial ratios of the company seems very strong and progressive. For example, the company’s asset ratio turnover has been increasing ever since 2013 to 2015. Moreover, the ratios are above 1 which implies that forever dollar the company is able to generate over 1 more dollar from it (Beaver, Correia & McNichols, 2012). To be exact in 2015 the company was able to generate I dollar and 43 cents of a dollar which shows that the company is able to pay for the loan within the shortest time possible and should not be overcharged for the loan. Moreover, from the analysis we note that the company has more assets as compared to its liabilities since the debt to the asset ratio of the company stands at 0.62% all the values are approximately 0.60 which implies that the company is stable and can negotiate for a loan using the assets that the company has. Based on the trends n ROA, ROE and the profit margin they are all increasing and are above the standard figure more especially the profit margin which is above 20%. Therefore, Becky Harrod is right to complaint about the overcharge.