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Important information about Company Analysis

See attached problem.

a. What is the company's average annual rate of sales growth from 2007 through 2009?

b. How long, on average, was Better Mouse Trap taking to collect on its receivable accounts in 2009? (Assume all of the company's sales were on credit.)

c. Was Better Mouse Trap more or less profitable in 2009 than it was in 2007? Justify your answer using at least two ratios.

d. Was Better Mouse Trap more or less liquid at the end of 2009 than it was at the end of
2007? Justify your answer using at least two ratios.

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In thousands of Dollars except for EPS

Part A
The growth rate in 2008 is ($570,389 - $495,990)/$495,990 = 0.15 = 15%
The growth rate in 2009 is ($541,869 - $570,389)/$570,389 = -0.05 = -5%
The average annual rate of sales growth = (15% - 5%)/2 = 5%

Part B
The number of sales turns in 2009 is $541,869/$34,196 = 15.8
Days to collect = 365/15.8 = 23 ...

Solution Summary

This solution analyzes the rate of sales growth, collection of accounts receivable (AR), profitability and liquidity for a company.

$2.19