Platoon Mental Health Care Inc.
Financial ratios:
The table below summarises the financial ratios calculated:
Garners' Platoon Mental Health Care, INC.
2008
Industry
Current ratio
1.60097324
2.0times
Quick ratio
0.74452555
1.2times
Cash ratio
0.13624595
0.25times
Inventory turnover ratio
1.34715909
2.50times
Day's sale's in inventory
270.940531
146.00days
Average collection period
81.2821285
91.00days
Average payment period
133.469
100.00days
Fixed asset turnover ratio
0.84924966
1.25times
Sales to working capital
2.48751249
4.00times
Total asset turnover ratio
0.54402447
0.50times
Capital intensity ratio
1.83815261
2.00times
Debt ratio
56%
50.00%
Debt-to-equity ratio
0.33755735
1.00times
Equity multiplier
13.133429
2.00times
Times interest earned
7.64761905
7.25times
Cash coverage ratio
8.21
8.00times
Profit margin
27%
18.75%
Basic earnings power ratio
26%
19.90%
ROA
14%
9.38%
ROE
190%
18.75%
Dividend payout ratio
31%
35%
Market-to-book ratio
1.35983793
1.300times
PE ratio
4.23835833
4.100times
Sustainable growth is determined by multiplying return on equity by th retention ration, the retention ratio is determined by the difference between earnings per share and dividends per share by earnings per share. Retention ratio is = 69% and ROE = 190%, this means that sustainable growth =131.03%
DuPont system:
ROE = profit margin X total asset turnover X Equity Multiplier
ROE = 190%
Expenses:
Expenses management is reflected by the profit margin, the firm's profit margin is 27% while the industry value is 18.75%, and this means that the firm manages its expenses properly.
Debt:
Debt management is reflected by the equity multiplier, the equity multiplier for the firm is 13.13 while the industry value is 2, and this means that the firm finances more using debt. This is also reflected by the debt equity ratio whose value is 0.337 while the industry value is 1.
Assets:
Asset management is reflected by the total asset turnover, the value for the firm is 0.54402447 times while the industry value is 0.50 times, and given that the firm's value is greater than the industry value then the conclusion is that the firm manages its assets properly. This is also reflected by the ROA where the value is 14% for the firm and 9.38% for the industry.
Reference:
Block, S. (2009). Foundation of financial Management, New Jersey: Prentice hall press.
