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    Business Analysis - Rarett Company

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    See attached spreadsheet.

    Additional information:
    1. There are $18000 shares of common stock outstanding
    2. Dividends paid in 2003 and 2004 were $112000-$6000 to preferred shareholders and $50000 to common shareholders. No dividends were paid in 2002.
    3.Market price per share of common stock is $15 in 2002, $25in 2003, and $40 in 2004.

    With this info, you are required to preform Vertical analysis on both the balance sheet and the income statement, and horizontal analysis on the balance sheet for the years presented as well as the following ratios for 2003 and 2004.

    1.Profit margin
    2.return on assets
    3. Return on common equity
    4. Account receivable turnover
    5. Average collection period
    6. Inventory turnover
    7. Fixed Asset turnover
    8. Total asset turnover
    9. Current ration
    10. quick ration
    11. Debt/assets ratio
    12. Times interest earned
    13. Earnings per share
    14. Price earnings ration

    What are your thoughts about this company? What is the analysis of its prospects (horizontal/vertical analysis)? What is it doing right and wrong? Can you answer those questions? Why or why not?

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    Solution Summary

    The expert provides a business analysis for Rarett Company.