Evaluate the overall performance of the two companies and in terms of : 1. Profitability 2. Operating Mana

[answerhappygod]

Evaluate the overall performance of the two
companies and in terms of :
1. Profitability
2. Operating
Management
3. Investment
Management
4. Financial
Management
Bert’s Bikes
Toby’s Tyres
Profitability
Gross Profit Margin (given)
19%
21.3%
Net Profit Margin (given)
3.5%
4.6%
EBIT/Sales (given)
7.0%
9.3%
Total Asset Turnover = Sales/Total Assets
5000/2500
2x
7500/4000
1.875x
Return on Assets = EBIT/Total Assets
350/2500
14%
700/4000
17.5%
Operating Management
Current Ratio = Current Assets/Current Liabilities
1280/650
1.97x
2560/1200
2.13x
Quick Ratio = (Current Assets – Inventory)/Current
Liabilities
(1280-680)/650
0.92x
(2560-1250)/1200
1.09x
Quick Ratio = (Current Asset – Inventory)/(Current Liabilities –
Line of Credit
(1280-680)/(650-50)
1.0x
(2560-1250)/(1200-200)
1.31x
Inventory Turnover = Cost of Goods Sold/Inventory
4050/680
5.96
5900/1250
4.72
Accounts Receivable Turnover = Sales/Accounts
Receivable
5000/460
10.87x
7500/1220
6.15x
Average Collection Period = 365/Accounts Receivable Turnover
365/10.87
33.58 days
365/6.1
59.34 days
Investment Management
Return on Equity = Profit /Total Equity
174/1250
13.9%
345/1500
23%
Earnings Yield = EPS Share Price
0.29/2.23
13%
0.986/4.50
21.91%
Proposed Dividend Payout = Total Dividend/Profit
87/174
0.50
241.5/345
0.70
Financial Management
Leverage = Debt/Total Assets
1250/2500
50%
2500/4000
62.5%
Leverage = Debt/Equity
1250/1250
100%
2500/1500
167%
Times Interest Earned = EBIT/Interest
350/60
5.83x
700/125
5.6x