Finance Analysis Assignment Example | Topics and Well Written Essays - 500 words

Finance Analysis - Assignment Example The company’s debt to total assets and the debt to equity ratio clearly shows that the company has been keen towards loan finance and currently the company’s debt as a percentage to its total has exceeded over 50%. The company’s quick ratio portrays a falling trend. This reduction in the quick ratio suggests that the company may face problems in paying of its obligations as they fall due, this can be because of an increase in debt obligation and a reduction in the ability to convert stock into cash (as shown by the inventory turnover ratio). 2. Assuming that the share price for REC company is $30, the company’s P/E ratio in the year 2004 would be 15.3 (30/1.96 (Market price per share/ EPS)). This P/E ratio can be considered to be good with respect to the clothing industry, hence it can be deduced that a $30 price per share for the REC company is the best value for money for an investor (Yahoo Finance, 2011). 3. The days payable outstanding ratio for the REC company is 41 days. This collection period is higher than the industry average, hence it clearly suggests that the wholesaler would be paid in comparison to the industry trend. As a wholesaler, this would not be amusing and would result in selling shoes to other retailers rather than REC company, who would pay a bit earlier i.e. in line with the industry average of days payable outstanding ratio. 4. As a recent college graduate, I would definitely join the company as the company seems to be a good learning prospect. The company operates in two different industries i.e. recreational equipment and clothing hence it would provide good learning exposure for me. The company’s finance department seems to be operating efficiently, considering the financial statements and the ratios prepared by the finance department. The financial statements seem to prepared after considering the relevant accounting and financial standards hence it the seniors