Tire City Ratio Analysis
The key ratios are in good position while few of the remainder ratios remain neutral .
Return on Equity
The actual ratios of return on equity from 1993 to 1995 are 23.9%, 24.5%, and 23.7%. The standard that applies to this ratio is around 14% to 20%. On average, the actual ratios are above standard, where as 20% is really good and 30% is basically perfect. The actual ratios have shown to go up and down but have still stayed in a good position. I believe that Tire City is doing really good in ROE and should keep up the good work.
Net Profit Margin
The actual ratios of net profit margin from 1993 to 1995 are 4.8%, 4.9%, and 5.1%. The standard NPM for the mass retail industry is low at 2%, average at 3.5% and high at 5%. Each of the actual ratios are very high compared to the standard and in year 1995 with a ratio of 5.1% exceeds the high percentage. The actual ratios have been consistent with meeting the standard and are going in a very good direction.
Accounts Receivable Days on Hand
The actual amounts for ARDOH from 1993 to 1995 are 57.24, 55.50, and 56.71. The standard ranges from 35 to 50. The average days on hand are higher than the standard. It is possible to meet standard but has been inconsistent from 1993 to 1995.
Accounts Payable Days on Hand
The actual days for APDOH from 1993 to 1995 are 40.33, 40.65, and 38.61. The standard ranges from 35 to 50. Each of the actual days on hand meet standard. For APDOH, the actuals have been consistent and within the standard.
Inventory Days on Hand
The actual days for Inventory DOH from 1993 to 1995 are 63.09, 56.39, and 58.72. The standard ranges from 60 to 90. The average days on hand are below the standard but days on hand in 1993 meet the standard. It is possible to reach the standard but have been inconsistent with reaching the standard in the past.
Long Term Debt as % of Total Capital
The actual ratios of long-term debt to capital from 1993 to 1995 are 30.6%, 21.5%, and 15%. The standard ranges from 15% to 40%.