Financial Statement Analysis

372 words - 2 pages

Financial statement analysis of Boston
Background

Profitability review
ROI has increased from 19.4% in 2010 to 24.5% in 2010.

Balance sheet review
For the vertical analysis of balance sheets, the inventory has increased from 10.3% to 12.5%. Meanwhile, percentages of other current assets have little changes. In this case, the percentage of current assets has been raised to 46.1% in 2011, as compared to 43.3% in 2010. The percentage of properties has decreased from 55.3% in 2010 to 52.7% in 2011, so fixed ...view middle of the document...

Although the ratio is still lower than that of adequate liquidity, the liquidity has got a little bit better in 2011 than that in 2010. The acid-test ratio has increased to 1.08 in 2011, as compared to 0.96 in 2010. This is good in that the company can pay all the current liabilities with its cash and account receivable. In this case, the company is more liquid in 2011 than in 2010.

The debt ratio has decreased from 35.95% in 2010 to 32.20% in 2011. The company uses more equity financing than debt financing to operate. The risk of the company declines as the proportion of debt goes down. Because debt ratio for both years is under 50%, the risk of bankruptcy is low.

Cash flows review
This company uses indirect method to present cash flows from operating activities, and the cash flows from operating activities are all positive in these years. The company’s cash equivalents have declined to $49,450 in 2011 as compared to $55,481 in 2009. The mean reason should be the dramatically increase in its financial activities in 2010 and 2011. The company purchases numerous common stocks in 2011 and 2010. In this case, cash flow from operations cannot exceed capital expenditures and debt repayment in 2009.

Activity review

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