The financial position of King And Roberts B Financial Analysis can be examined by taking a look at its ratio analysis.
We can see in appendix 1 how the profits has been declining over the years after 2005. Nevertheless, the truth that the gross profit margin has actually reduced too recommends that the cost of sales have actually not gone down at the exact same speed. The declining net profitability, showing an unfavorable pattern from 2006 to 2007 suggests that expenditures have increased far more than the company is able to manage offered its existing resources. With a long term financial obligation contributing to the interest expenditure, King And Roberts B Financial Analysis is in alarming requirement of an alternative income stream.
We can see a major decreasing trend in the present ratio too showing a fall in liquidity which is another point of issue for King And Roberts B Financial Analysis specifically as it has a long term debt to pay off also. With the current properties not in a position to pay off the present liabilities, we can see how the business would remain in a major monetary problem unless the cash flow enhances with extra sources of finance.
We could check out the financial condition of King And Roberts B Financial Analysis even more by taking a look at the company's overall financial obligation to total properties ratio in appendix 2. We can see how the total properties of the company have been declining from 2005 onwards. The long term debt has actually remained at $160 million while the short term financial obligation has actually increased side by side. Such a circumstance has actually brought King And Roberts B Financial Analysis to a point where its overall financial obligation to total possessions ratio has increased as well. An increasing total financial obligation to total assets ratio suggests that the risk has actually increased in terms of the business's possessions not being enough to cover its total liabilities. This might not be revealing the general liquidity position but gives clarity in regards to the total financial position of the company.