This shows that the company is not collecting on their receivables as often. Berry’s bug blasters does not sell merchandise therefore there is no inventory turnover. The people who are interested in the liquidity ratios would be investors and creditors in the current ratios, acid-test ratios, receivable turnover, and the inventory turnover to determine the stability of the company and the ablity to meet its liabilities. The data shows that the company is making plenty of revenue to meet their liabilities and has been for several years.
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The receivables turnover ratio shows that the company has not been able to collect on receivables as often in 2008 as they did in 2007. Profitability ratio shows the income or operating success of a company. To obtain debt and equity financing it is necessary to find out what the income of the company is. The income of the company affects the liquidity position and the company’s ability to grow. The people who would be interested in our findings for the profitability ratio would be creditors and investors.
Due to the fact that Berry’s Bug Blasters is a service company and not in the business of sales, it does not have a line item for net sales. Therefore, the measures of profit margin and asset turnover do not apply to Berry’s Bug Blasters. On the measure of return on assets we can see that for Berry’s Bug Blasters the return on asset for 2008 with a 31. 4% was very low compare to the previous year with a 94. 8%. Return on common stockholders’ equity is a profitability ratio that measures the profitability from the common stockholders’ view point.
We can see that for Berry’s Bug Blasters 2008 was not a very good year, the rate of return on common stockholders’ equity at 35. 8% was very low compare to 2007 rate of 102. 9%. The performance and position for Berry’s Bug Blasters shows a decrease. Solvency Ratio shows the Berry’s Bug Blasters ability to survive over a long period of time. Berry’s Bug Blasters does not report any interest debts on their balance sheet. Since Berry’s Bug Blasters does not have any interest debt so they do not have to worry about payments to repay the debt.
Given that Berry’s Bug Blasters has not had long term debt since 2005 when creditors and investors analyze the financial statements of the company they judge the company’s ability to repay. It can be determined if the Berry’s Bug Blasters can repay the debt by checking to verify that the total debt does not go over a certain percentage of the income. Berry’s Bug Blasters debt ratio lets the investors and creditors know that their solvency ratio for debt to asset for 2007 is at 24. 7% and for 2008 is 15. 88%. This informs the investors and creditors their ability in how much they can borrow and pay back.
The people who would be interested in our findings for the solvency ratio would be the investors and creditors of Berry’s Bug Blasters. This provides them the necessary information about the company’s ability to repay a debt and the amount that the company can borrow. This data reveals that Berry’s Bug Blaster is financially stable and can take a long-term debt and still be able to repay it.
