Financial Statements Analysis
Assignment One
Quick Mart ltd is a firm that specializes in the production, distribution and retail of fresh
farm products with food stores in all the modern shopping malls in Kenya. A detailed
analysis of the financial statements is summarized as follows;
1
2
3
4
5
6
7
8
9
10
11
Ratio
2018
2019
2020
Gross profit margin
Inventory Turnover
Depreciation/Total Assets
Days’ sales in receivables
Debt to Equity
Profit Margin
Total Asset Turnover
Quick Ratio
Current Ratio
Times Interest Earned
Earnings per share
0.45
62.65
0.25
113
0.75
0.082
0.54
1.028
1.33
0.9
1.75
0.40
42.42
0.014
98
0.85
0.07
0.65
1.03
1.21
4.375
1.85
0.35
32.25
0.018
94
0.90
0.06
0.70
1.029
1.15
4.45
1.90
2020Industry
Average
0.35
53.25
0.015
130.25
0.88
0.075
0.40
1.031
1.25
4.65
1.88
Additional information
In the annual report to the shareholders, the CEO of Quick Mart Ltd note, “2020 was a
good year for the firm with respect to our ability to meet our short-term obligations. We
had higher liquidity largely due to an increase in highly liquid current assets (cash,
account receivables and short-term marketable securities).”
Required
a) Evaluate the CEO statements using the data provides but also focusing on the
efficiency of the company
b) You are asked to provide the shareholders with an assessment of the firm's solvency
and leverage. Be as complete as possible given the above information, but do not use
any irrelevant information.
c) Discuss the additional information that you would require to analyze the Diluted
Earnings Per Share
d) Using a model of your choice explain how you can predict corporate failure (financial
distress) of Quick Mart Ltd
e) Prepare a report on the general trends from 2018 to 2020 clearly identifying areas that
management must focus on