The financial position of National Convenience Stores Inc Financial Analysis can be evaluated by having a look at its ratio analysis.
We can see in appendix 1 how the revenue has been declining throughout the years after 2005. However, the fact that the gross profit margin has decreased also suggests that the cost of sales have actually not decreased at the very same speed. The decreasing internet profitability, revealing an unfavorable trend from 2006 to 2007 suggests that expenditures have increased far more than the company has the ability to handle given its current resources. With a long term financial obligation contributing to the interest expense, National Convenience Stores Inc Financial Analysis remains in alarming need of an alternative income stream.
We can see a significant decreasing trend in the current ratio too showing a fall in liquidity which is another point of issue for National Convenience Stores Inc Financial Analysis particularly as it has a long term financial obligation to settle as well. With the present properties not in a position to settle the present liabilities, we can see how the company would be in a significant financial problem unless the cash flow improves with extra sources of financing.
We could explore the monetary condition of National Convenience Stores Inc Financial Analysis even more by taking a look at the business's overall debt to total possessions ratio in appendix 2. We can see how the overall assets of the company have actually been declining from 2005 onwards. The long term financial obligation has actually stayed at $160 million while the short term financial obligation has increased side by side. Such a circumstance has actually brought National Convenience Stores Inc Financial Analysis to a point where its total financial obligation to total properties ratio has increased too. A rising total debt to total properties ratio suggests that the threat has increased in regards to the business's properties not sufficing to cover its total liabilities. This may not be revealing the general liquidity position however provides clearness in terms of the total monetary position of the company.