Digimon Manufacturing Company Ratio Analysis

Maria Visaggio

ACC1001

Spring 2000

Liquidity

Based on Digimon’s Current and Quick Ratios, the company will

be able to survive in the short-run. It is able to pay its debts. Current Ratio

– Division A - 1.64– Division B - 1.98– Division C - 1.98– Corporate - 1.87

Quick Ratio– Division A - 1.09– Division B - 1.11– Division C - 1.11– Corporate - 1.11

Solvency

Based on Digimon’s Debt to Asset Ratio, the company is able to pay off its long run debts, and will be able to survive in the long-run

For Division A, Creditors have contributed more to the company than the owners, but in Division B, C, and Corporate the owners and creditors have contributed the same.

Debt to Asset Ratio – Division A - 56.27%– Division B - 49.36%– Division C - 49.36%– Corporate - 51.52%

Profitability

Profitability seems reasonable. The only weakness in the ratios is Division A and that is because it had a negative Net Income. To make sure the ratios are reasonable, one could check previous years’ ratios and with other similar industries.

Here is a chart comparing the ratios for the different divisions.

Ratio Comparisons

-5.00%

0.00%

5.00%

10.00%

15.00%

20.00%

D) Return onSales

E) Return onAssets

F) Return onEquity

Division A

Division B

Division C

Asset Management

Based upon the Average Collection Period and Average Days Inventory ratios, Digimon’s turnover ratios are okay. The Inventory ratio could be better for Division B, C, and Corporate, but one would have to check with other industries.

Average Collection Period– Division A - 47.41 days– Division B - 45.52 days– Division C - 45.52 days– Corporate - 46.13 days

Average Days of Inventory– Division A - 60.74 days– Division B - 89.60 days– Division C - 89.60 days– Corporate - 80.21 days

Overall Analysis

According to Digmon’s ratios, the company seems to be doing well overall. Most of the ratios are strong, so the company should be able to survive. (To see the ratios and how they were calculated, Click here)