Kudler Fine Foods Ratio Analysis Memo

September 18, 2011

To: Ms. Kathy Kudler, CEO

From: Accounting

Re: Company Ration Analysis

Kudler Fine Foods accounting department has completed a full analysis on the 2003 financial statistics. Different tools of analysis are used to help complete the analysis measurement. Below you will find exact calculations on liquidity ratios, profitability ratios, and solvency ratios. Financials from 2003 have helped us get an overall view of the company's well being and with further years to come we will be better able to estimate a yearly return.

To measure the company's short-term ability to pay its maturing obligations and to meet unexpected needs for cash, or liquidity ratio, several ratios are used. First is the current ratio rate. This measures the company's liquidity and short-term debt-paying ability. Kudler's current ratio is 16.95:1. This means the company has $16.95 of current asset for every dollar of current liability. This is great in comparison to the average industry's ratio, which is 1:06:1. Kudler's acid-test ratio, which measure immediate liquidity, is 13:04:1. The average industry's is 0.29:1. The receivable turn-over rate is 125.54. In other words, Kudler Fine Foods collects 125 receivables during its given period. This rate is over four times the industry average of 28.2. After measuring the inventory turnover, Kudler Fine foods inventory is sold 18.9 times during its accounting period. With the average industry rate being 7.0, its obvious to see the company is doing well.

Profitability ratios measure the income or operating success of a company for a

given period of time. To help determine profitability ratios, Kudler's accounting department measured the company's assets turnovers, profit margins, return on assets, and return on common Stockholder's Equity. To begin, all ratio rates in their given field are higher than the industry's average ratio rate. The asset turnover shows Kudler generate $4.04 of sales for each dollar the company invested in assets. The percentage of each dollar of sales that resulted in net income, or profit margin amount, is 6.7%. A return of asset rate of 25.3% shows the overall measure of profitability. This was determined by measured dividing net income by average assets. This rate is more than three times the industry's average rate. The return on common Stockholder's Equity has a high rate of 0.90%. This means the company earns $90 for each dollar invested by the owner.

Solvency ratios, which measure the ability of a company to survive over a long period of time, that were used are debt to assets ratios and times interest earned rations. The debt to assets ratios shows the Kudler's creditors contribute 28% of total assets