Running head: INDIVIDUAL LEARNING ASSURANCE 1
Individual learning Assurance
Name
Institution
Date
INDIVIDUAL LEARNING ASSURANCE 2
QUESTION ONE
Calculated Financial Ratios
Liquidity Ratios
1. Current ratio: Current assets/Current liabilities
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑟𝑎𝑡𝑖𝑜 = 2,247,047
1,935,647 = 1.16
Current Ratio: 1.16
2. Quick ratio: Current assets minus inventory/Current liabilities
2,247,047 −801,036 = 1,446,011
𝑄𝑢𝑖𝑐𝑘 𝑟𝑎𝑡𝑖𝑜 = 1,446,011
1,935,647 = 0.74
Quick Ratio = 0.74
Leverage Ratios
3. 𝐷𝑒𝑏𝑡 𝑡𝑜 𝑡𝑜𝑡𝑎𝑙 𝑎𝑠𝑠𝑒𝑡𝑠 𝑟𝑎𝑡𝑖𝑜 = 𝑇𝑜𝑡𝑎𝑙 𝑑𝑒𝑏𝑡
𝑇𝑜𝑡𝑎𝑙 𝑎𝑠𝑠𝑒𝑡𝑠
𝐷𝑒𝑏𝑡 𝑡𝑜 𝑎𝑠𝑠𝑒𝑡 𝑟𝑎𝑡𝑖𝑜 = 4,109,986
5,629,516 = 0.73
Debt to total assets ratio: 0.73
4. Debt-to-equity ratio: Total debt/Total stockholders’ equity
𝐷𝑒𝑏𝑡 𝑡𝑜 𝑒𝑞𝑢𝑖𝑡𝑦 𝑟𝑎𝑡𝑖𝑜 = 4,109,986
1,519,530
= 2.70
Debt/Equity Ratio: 2.70
5. Long-term debt-to-equity ratio: Long-term debt/Total stockholders' equity
𝐿𝑜𝑛𝑔 𝑡𝑒𝑟𝑛 𝑑𝑒𝑏𝑡 𝑡𝑜 𝑒𝑞𝑢𝑖𝑡𝑦 𝑟𝑎𝑡𝑖𝑜 = 1,548,963
1,519,530 = 1.01
INDIVIDUAL LEARNING ASSURANCE 3
Long-term debt to equity ratio: 1.01
6. Times earned interest ratio: Profits before interest and taxes/Total interest charges
𝑇𝑖𝑚𝑒𝑠 𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑒𝑎𝑟𝑛𝑒𝑑 𝑟𝑎𝑡𝑖𝑜 = 1,389,575
83,532 =16.6
Times earned interest ratio: 16.6
Activity Ratios
7. Inventory turnover: Sales/Inventory of finished goods
𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦 𝑡𝑢𝑟𝑛𝑜𝑣𝑒𝑟 = 7,421,768
730,289 =10.16
Inventory Turnover: 10.16
8. Fixed assets turnover: Sales/Fixed assets
𝐹𝑖𝑥𝑒𝑑 𝑎𝑠𝑠𝑒𝑡 𝑡𝑢𝑟𝑛𝑜𝑣𝑒𝑟 = 7,421,768
2,151,901 = 3.44
Fixed assets turnover: 3.44
9. Total assets turnover: Sales/Total assets
Total asset turnover = 7,421,768
5,629,516 = 1.31
Total assets turnover: 1.31
10. Accounts receivable turnover: Annual credit sales/Accounts receivable or
Accounts receivable turnover: Net sales/Average accounts receivable
Receivable turnover = 7,421,768
596,940 =12.43
11. Average Collection Period: 365 days/ Receivables turnover
INDIVIDUAL LEARNING ASSURANCE 4
𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑐𝑜𝑙𝑙𝑒𝑐𝑡𝑖𝑜𝑛 𝑝𝑒𝑟𝑖𝑜𝑑 = 365
12.43 =29.36 𝑑𝑎𝑦𝑠
Average Collection Period: 29.36 days
Profitability Ratios
12. Gross profit margin: (Sales minus costs of goods sold)/Sales
𝐺𝑟𝑜𝑠𝑠 𝑝𝑟𝑜𝑓𝑖𝑡 = 7,421,768 − 4,085,602 = 3,336,166
𝐺𝑟𝑜𝑠𝑠 𝑚𝑎𝑟𝑔𝑖𝑛 = 3,336,166
7,421,768 =44.95
Gross Profit Margin: 44.95%
13. Operating profit margin: Earnings before interest and taxes (EBIT)/Sales
Operating margin = 1,389,575
7,421,768 = 18.72
Operating profit margin: 18.72%
14. Net profit margin: Net income/Sales
Net margin = 846,912
7,421,768 =11.41
Net Profit Margin: 11.41%
15. Return on total assets (ROA): Net income/Total assets
ROA = 845,912
5,629,516 = 0.15
ROA: 0.15
INDIVIDUAL LEARNING ASSURANCE 5
16. Return on stockholders’ equity (ROE): Net Income/Total stockholder’s equity
𝑅𝑂𝐸 = 846,912
1,519,530 = 0.55
ROE: 0.55
17. 𝐸𝑎𝑟𝑛𝑖𝑛𝑔𝑠 𝑝𝑒𝑟 𝑠ℎ𝑎𝑟𝑒 (𝐸𝑃𝑆): 𝑁𝑒𝑡 𝐼𝑛𝑐𝑜𝑚𝑒/ # 𝑜𝑓 𝑠ℎ𝑎𝑟𝑒𝑠 𝑜𝑓 𝑐𝑜𝑚𝑚𝑜𝑛 𝑠𝑡𝑜𝑐𝑘 𝑜𝑢𝑡𝑠𝑡𝑎𝑛𝑑𝑖𝑛𝑔
𝐸𝑃𝑆 = 846,912
359,901 = 2.35
EPS: 2.35
18. 𝑃𝑟𝑖𝑐𝑒 − 𝑒𝑎𝑟𝑛𝑖𝑛𝑔𝑠 𝑟𝑎𝑡𝑖𝑜: 𝑆𝑡𝑜𝑐𝑘 𝑃𝑟𝑖𝑐𝑒/𝐸𝑃𝑆
𝑃𝐸 𝑟𝑎𝑡𝑖𝑜 = 97.23
3.91 =24.87
Price-earnings ratio: 24.87
Growth Ratios:
19. Annual Percentage growth in total sales:
Sales: Annual % growth in total sales − (current year – previous year)/previous year
Annual percentage growth = 7,421,768 − 7,146,079
7146079 = 3.86%
Growth Ratio: 3.86%
20. Annual percentage growth in profits:
Net income: Annual % growth in profits = - (current year – previous year)/previous year
𝐶ℎ𝑎𝑛𝑔𝑒 = 846,912 − 820,470 = 26,442
𝑃𝑒𝑟𝑐𝑒𝑛𝑡𝑎𝑔𝑒 𝑔𝑟𝑜𝑤𝑡ℎ = 26,442
820,470 = 3.22%
INDIVIDUAL LEARNING ASSURANCE 6
Annual percentage growth in profits: 3.22%
Observably, the change is positive, as Hershey’s growth carries on to increase up both 3.86% in sales
and 3.22% in profits in 2014. In every quarter, the company projects an increase in profitability as
well as well sales growth. This, however, results to an increase in the annual percentage growth of
company profits and sales thereby increasing investor value.
QUESTION TWO – Tiffany & Co. Inc.
Tiffany & Co. Inc. is an American based jewelry and specialty retailer which has its
headquarters in New York City. It has 121 stores in America, 72 stores in the Asian-Pacific area as
well as 37 stores in Europe. The organization has not given any signs of slowing down in terms of its
expansion. With an increase in the sales in the financial year 2013, in the Asian Pacific area at a rate of
17% because of China, as well as the total sales increase by rate of 9% in the Europe nations, I do
believe that Tiffany & Co. Inc. should keep on adding stores to the Asia nations more particularly
Japan and China because they appear to be their main market within the Asian Pacific region. Europe
has the smallest number of stores in comparison to other parts but seems to indicate an intense growth
in the United Kingdom having more than 40% of the European net sales as well as total of 9%
increase from the preceding financial year in Europe (David, F. R., & David, F. R. 2017). Thus,
Tiffany & Co. Inc. should focus on the increasing demand for the products within the European
nations and add more stores in the United Kingdom because they represent a 40% of the total sales in
Europe and this will make the organization to shift to the European market by developing a strong
base for customers.
INDIVIDUAL LEARNING ASSURANCE 7
Tiffany & Co. Inc. is a well-known brand which has been in existence since the 1800s. This
makes it be among the iconic jewelry brands internationally which are highly recognized by the blue
boxes. In comparison to the main competitors and other jewelry brands in the market, the Tiffany blue
box is highly distinguished from the others in the world. The company also offers different types of
jewelry pieces, engagement, statement as well as fashion which have different prices which fits the
needs of different customers. Due to this reason, Tiffany & Co. Inc. can expand the target market by
providing products which can be attained by each person. So as to maintain the quality, Tiffany & Co.
Inc. invests in gemstone and diamond inventory, has professional staff and it is strategically located
(David, F. R., & David, F. R. 2017). Even though Tiffany & Co. Inc. have gone beyond to hold
integrity of their own brand at the highest level, and also has continued their efforts to offer consumers
with luxury experience, they have been facing competition from other brands which imitate the
likeliness of their blue box and others even label their products using Tiffany name so as to increase
their sales. For instance, in the year 2013, Costco had a display on a ring with Tiffany setting label
which they had no authority to use. With the highly use of the e-commerce, there are numerous brands
which attempt to sell counterfeit products from Tiffany & Co. Inc. or even exact gemstones and
diamonds which resemble that of Tiffany’s brand. These companies can be considered to be imitator
brands and competitors who want to use their image to sell their own products but there is always a
sense of exclusivity within the Tiffany & Co. Inc. In Tiffany & Co. Inc., customers get utmost
services when buying products directly from the organization and also receives the blue box of the
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brand. This blue box shows the exclusivity as well as unmatched craftsmanship established by the
Tiffany & Co. Inc.
The brand was established back in 1837 and since then they have come up with their
brand up to the most recognizable jewelry brands worldwide. The company has created the blue
box brand which many people had hoped to have one day. Therefore, I do believe that Tiffany’s
can continue fulfilling their promise of the blue box. In this perspective, it provides consumers
with a sense of uniqueness and permits the customers to feel special when getting products in the
blue box. The society at large has become familiar with Tiffany’s brand color hence becoming
one of the most recognizable types more specifically in the US and the company aims at
attracting many customers using the blue box. The Tiffany & Co. Inc. continue investing in the
marketing budget annually. For instance, in the year 2013, they invested more than $200 million
and this is a clear indication of no slowing down as far as growth is concerned (David, F. R., &
David, F. R. 2017).
The Tiffany & Co. Inc. has to use the profitability ratios in determining which region
register high profits based on the sales and the total growth. The profitability ratios are highly
used ratios and they allow a comparative judgment about the performance of the company. These
ratios are widely used in evaluating the financial success of a given business firm. For instance,
the return on sales offers a measure of the bottom-line profitability while the gross margin
determines the direct production costs of the business and they are both used in projecting the
growth (Warren & Jones, 2018). In comparing the financial states of 2014 and that of 2013, the
INDIVIDUAL LEARNING ASSURANCE 9
gross profit margin of Tiffany & Co. Inc. increased from 0.57% to 0.58% giving a 1.75%
increase from 2013 to 2014. The return on assets increased by 330.8% with an ROA of 0.13% in
2013 and 0.56% in 2014. Tiffany & Co. Inc. usually upholds the luxury feature of the brand and
this makes many companies aim at using the Tiffany blue box in attracting customers.
Nevertheless, since the little blue box is part of Tiffany’s brand, a good number of consumers
will keep on making purchases through Tiffany’s retailer so as to receive the unique blue box
which permits the Tiffany & Co. Inc. to keep on fulfilling their promises as well as growing their
brand.
INDIVIDUAL LEARNING ASSURANCE 10
References
David, F. R., & David, F. R. (2017). Strategic management: A competitive advantage approach.
Pearson.
Warren, C. S., & Jones, J. (2018). Corporate financial accounting. Cengage Learning.
