Produce a table of four profitability ratios, four efficiency ratios Assignment

Produce a table of four profitability ratios, four efficiency ratios and two liquidity ratios for each enterprise below. Written Report - Assignment Example Daley has a current ratio of 1.3: 1 which is lower than Macey’s despite having both, more current assets and liabilities. It is however, still enough to meet its short term obligations. Both companies have a good liquidity position, which prevents them from having to sell off their inventory in order to pay their short term debts. Without liquidating their inventories, both companies can easily manage their short term obligations through their most liquid current assets. Daley has a better inventory turnover ratio which indicates that it takes less time to sell off its finished products. With less cash tied up in inventory and considerably lower cost of goods sold, Daley takes approximately 10 days less than Macey to convert its goods into sales. Customers of Daley are taking twice as long to repay the company which means that the receivable collection is not timely. Compared to Macey, Daley has a lot tied up in the form of receivables, more than 1.5 times as much as Macey. Its sales are also approximately $300 million less than Macey’s. Macey’s receivable collection seems to be within their average length of time taken to recover cash. These figures indicate that both the firms deal in some sort of fast moving consumer goods to able to recover cash within 2-3 days. Daley’s utilization of fixed assets is better than Macey’s with a ratio of 8.9 times. For every $1 invested in fixed assets, Daley is making $8.9 in sales. On the other hand, Macey is making only $5.5 in sales for every $1 invested in fixed assets. Macey has higher sales than Daley but it also has approximately twice the amount of fixed assets. This signifies that Macey has too much invested in fixed assets. Daley, despite having higher current assets and lower sales than Macey’s, has a better total asset turnover. Macey’s investment in fixed asset seems to be unnecessary and is affecting its ability to generate sufficient sales with regards to the amount of fixed assets