financial statements ratio

Part 2: Financial Statement Analysis


  1. Based on your financial statements (from Part 1), calculate the following ratios for the two years. Show all your calculations in good form. Show your formulas. If you use excel, each calculation needs to show the excel formula


Current ratio

Quick ratio

Inventory turnover (times)

Accounts receivable turnover (days)

Total asset turnover (times)

Debt ratio

Times interest earned

Gross profit margin

Net profit margin

Return on total assets

Return on equity

Calculate earnings per share

P/E ratio

Return on equity using DuPont Analysis


  1. Comments on the trend of each ratio by comparing 2021 to 2020 ratios. In addition to commenting on the trends of the ratios, explain the meaning of each of ratio.
  2. What is DuPont Analysis? As a manager, how would you use Dupont Analysis in the overall evaluation of the financial performance of a firm? Support your comments with appropriate in-text citations and references.




  1. Find industry ratios for 2021 similar to the ones you calculated. Compare the industry ratios you found to the ratios you calculated. Based on the industry average, how is Cost Cutter Retailers, Inc. doing financially? Please note that this a retail business. The industry average you use should be from the retail sector.


  1. Please organize and group your ratios and calculations as follows:


Liquidity ratios  
Current Ratio  
Quick Ratio  


Asset Management ratios

Inventory Turnover  
Accounts Receivable Turnover
Fixed Asset Turnover
Total Asset Turnover

Debt Management ratios

Debt Ratio  
Times Interest Earned


Profitability ratios  
Profit Margin

Return on Assets

Return on Equity (using DuPont)


Market Value ratios

Price-to Earnings Ratio

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