Step 6 Strategic Financial Analysis for the Last Reported Fiscal Year

Use the company’s income statement and balance sheet to calculate four (4) keys. financial ratios. One key ratio must come from each of the four key categories: leverage, liquidity, profitability, and efficiency. The four specific ratios selection must come from the following categories Leverage Ratios (Long-term debt ratio, Total debt ratio, Debt-to-equity ratio, Times interest earned ratio, and Cash coverage ratio). Liquidity Ratios (Net working capital to total assets ratio, current ratio, quick ratio, and cash ratio). Efficiency Ratios (Asset turnover ratio, average collection period, inventory turnover ratio, and Days sales outstanding)

Profitability Ratios (Net Profit Margin, Return on Assets, and Return on Equity)

**Strategic Financial Analysis for the Last Reported Fiscal Year**

All the data for this study is collected from the annual report of Q2, 2021, and the UNITED STATES SECURITIES AND EXCHANGE COMMISSION report at the end of September 30, 2021.

At the end of September 2021, balance sheet information is as follows (in millions, except per share data)

**Assets**

Cash and cash equivalents – $ 16065; Inventory – $ 5199; Total current assets – $ 25002; Total assets – $ 57834

**Liabilities**

Accounts payable – $ 8,260; Total current liabilities – $ 18,051; Total liabilities – $ 29,340

**Equity**

Total stockholders’ equity – $ 27,053; Total liabilities and equity – $ 57,834

UNITED STATES SECURITIES AND EXCHANGE COMMISSION report information at the end of September 30, 2021. Information is as follows. (in millions, except per share data)

Total revenues – $ 13,757; Total gross profit – $ 3,660

**Leverage ratios**

** Debt ratio formula** = total debt / total asset

** Debt ratio** = 6438 / 57834 = 0.1113

** Debt to equity ratio** = total debt / total equity

** Debt to equity ratio** = 6438 / 27053 = 0.2379

**Liquidity ratio**

** Current ratio** = Current asset / current liabilities

** Current ratio** = 25002 / 18051 = 1.3850

** Quick ratio** = ( cash and cash equivalents + accounts receivables ) / current liabilities

** Quick ratio** = ( 16065 + 1962 ) / 18051 = 0.9986

** Cash ratio** = ( cash + cash equivalents ) / total current liabilities

** Cash ratio** = 16065 / 18051 = 0.8899

**Efficiency ratio**

** Asset turnover ratio** = net sale / average total asset

** Asset turn over ratio** = 13757 / [ ( 57834 + 52148 ) / 2 ] = 13757 / 54991= 0.2502

** Inventory turnover ratio** = cost of goods sold / average inventory

= 1656 / [ ( 5199 + 4101 ) / 2 ] = 1656 / [ 9300 / 2 ]

** Inventory turnover ratio** = 1656 / 4650 = 0.3561

**Profitability ratio**

** Net profit margin** = ( net income/sales income/asset) * 100

** Net profit margin** = ( 3660 / 13757 ) * 100 = 0.2660 * 100 = 26.6 %

** Return on asset** = ( net income / asset ) * 100

** Return on asset** = ( 3660 / 57834 ) * 100 = 0.0633 * 100 = 6.33 %

** Return on equity** = ( net income/shareholder’s equity )

** Return on equity** = ( 13757 / 27053 ) = 0.5085

**Reference list**

Q2 FINANCIAL SUMMARY report.

UNITED STATES SECURITIES AND EXCHANGE COMMISSION report.