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Please, answer the attached question
Following are the auditor’s calculations of several
key ratios for Cragston Star Products. The primary purpose of this information is to
understand the client’s business and assess the risk of financial failure, but any other
relevant conclusions are also desirable.

Ratio 2013 2012 2011 2010 2009 1 Current ratio 2.08 2.26 2.51 2.43 2.5 2 Quick ratio 0.97 1.34 1.82 1.76 1.64 3 Times interest earned 3.5 3.2 4.1 5.3 7.1 4 Accounts receivable turnover 4.2 5.5 4.1 5.4 5.6 5 Days to collect receivables 86.9 66.36 89.02 67.59 65.18 6 Inventory turnover 2.03 1.84 2.68 3.34 3.36 7 Days to sell inventory 179.8 198.37 136.19 109.28 108.63 8 Net sales divided by tangible assets 0.68 0.64 0.73 0.69 0.67 9 Profit margin 0.13 0.14 0.16 0.15 0.14 10 Return on assets 0.09 0.09 0.12 0.1 0.09 11 Return on equity 0.05 0.06 0.1 0.1 0.11 12 Earning per share $4.30 $4.26 $4.49 $4.26 $4.14
Ratio 2013 2012 2011 2010 2009 1 Current ratio 2.08 2.26 2.51 2.43 2.5 2 Quick ratio 0.97 1.34 1.82 1.76 1.64 3 Times interest earned 3.5 3.2 4.1 5.3 7.1 4 Accounts receivable turnover 4.2 5.5 4.1 5.4 5.6 5 Days to collect receivables 86.9 66.36 89.02 67.59 65.18 6 Inventory turnover 2.03 1.84 2.68 3.34 3.36 7 Days to sell inventory 179.8 198.37 136.19 109.28 108.63 8 Net sales divided by tangible assets 0.68 0.64 0.73 0.69 0.67 9 Profit margin 0.13 0.14 0.16 0.15 0.14 10 Return on assets 0.09 0.09 0.12 0.1 0.09 11 Return on equity 0.05 0.06 0.1 0.1 0.11 12 Earning per share $4.30 $4.26 $4.49 $4.26 $4.14
Ratio 2013 2012 2011 2010 2009

Ratio
Ratio
2013
2013
2012
2012
2011
2011
2010
2010
2009
2009
1 Current ratio 2.08 2.26 2.51 2.43 2.5
1
1
Current ratio
Current ratio
2.08
2.08
2.26
2.26
2.51
2.51
2.43
2.43
2.5
2.5
2 Quick ratio 0.97 1.34 1.82 1.76 1.64
2
2
Quick ratio
Quick ratio
0.97
0.97
1.34
1.34
1.82
1.82
1.76
1.76
1.64
1.64
3 Times interest earned 3.5 3.2 4.1 5.3 7.1
3
3
Times interest earned
Times interest earned
3.5
3.5
3.2
3.2
4.1
4.1
5.3
5.3
7.1
7.1
4 Accounts receivable turnover 4.2 5.5 4.1 5.4 5.6
4
4
Accounts receivable turnover
Accounts receivable turnover
4.2
4.2
5.5
5.5
4.1
4.1
5.4
5.4
5.6
5.6
5 Days to collect receivables 86.9 66.36 89.02 67.59 65.18
5
5
Days to collect receivables
Days to collect receivables
86.9
86.9
66.36
66.36
89.02
89.02
67.59
67.59
65.18
65.18
6 Inventory turnover 2.03 1.84 2.68 3.34 3.36
6
6
Inventory turnover
Inventory turnover
2.03
2.03
1.84
1.84
2.68
2.68
3.34
3.34
3.36
3.36
7 Days to sell inventory 179.8 198.37 136.19 109.28 108.63
7
7
Days to sell inventory
Days to sell inventory
179.8
179.8
198.37
198.37
136.19
136.19
109.28
109.28
108.63
108.63
8 Net sales divided by tangible assets 0.68 0.64 0.73 0.69 0.67
8
8
Net sales divided by tangible assets
Net sales divided by tangible assets
0.68
0.68
0.64
0.64
0.73
0.73
0.69
0.69
0.67
0.67
9 Profit margin 0.13 0.14 0.16 0.15 0.14
9
9
Profit margin
Profit margin
0.13
0.13
0.14
0.14
0.16
0.16
0.15
0.15
0.14
0.14
10 Return on assets 0.09 0.09 0.12 0.1 0.09
10
10
Return on assets
Return on assets
0.09
0.09
0.09
0.09
0.12
0.12
0.1
0.1
0.09
0.09
11 Return on equity 0.05 0.06 0.1 0.1 0.11
11
11
Return on equity
Return on equity
0.05
0.05
0.06
0.06
0.1
0.1
0.1
0.1
0.11
0.11
12 Earning per share $4.30 $4.26 $4.49 $4.26 $4.14
12
12
Earning per share
Earning per share
$4.30
$4.30
$4.26
$4.26
$4.49
$4.49
$4.26
$4.26
$4.14
$4.14

a . What major conclusions can be drawn from this information about the company’s
future?

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