CanGo’s Financial Analysis Essay

Following up with our initial analysis delay week, NewGen had the opportunity to review CanGos financial statement. The success of a stock depends on its ability to remain profitable over the long term, man being able to pay all its financial obligations and earning above mediocre returns. NewGen leveraged our knowledge of Investment symmetryns, breaking our analysis down into four (4) strike areas, efficiency, financial leverage, liquidity and profitability. Attached you will find our financial analysis summary matrix.1. energy RatioWe began with a look at your efficiency ratio, concentrating on your receivables turn over for the past times year. This reflects the time between your sale and substantial collection. If a companys Turnover Rate is significantly spurn than industry norms, there could be an underlying reason such as poor collection methods, high-risk customers or low sales. With CanGos Efficiency Ratio for receivables turnover was at 1.51, there is room for impr ovement and a closer look needs to be performed to pinpointed where the problem lies. We next looked at CanGos Inventory Turnover as a measure of CanGos muniment management efficiency. In general, a higher value indicates wear performance and lower value means inefficiency in controlling inventory levels CanGos was 1.56. This lower inventory turnover ratio may be an indication of overstocking which may pose risk of obsolescence and increased inventory guardianship costs (Accounting Explained, 2012).2.Financial LeverageTaking a look at CanGos equity ratio for how much they relied on their debt, we were surprise to see a low debt to equity ratio of 7.57, thereby enabling CanGo to utilize much of their revenue for their future plans (Financial Dictionary, 2012).3.Liquidity RatioOur Review of CanGos Liquidity include the current ratio, the quick ratio and the operating cash flow ratio or Working Capital. a. Current Ratio reflected a 1, which is low if CanGo wishes to frame themselv es to turn short-term assets into cash to cover debts or assist with the mean upgrades. b. Your Quick Ratio fell below a 1 to .95. As a common rule of thumb, a quick ratio of great than 1.0 means a company is sufficiently able to meet their short-term liabilities. With CanGos falling below this threshold, could be indicative that your over-leveraged, struggling to stay fresh or grow sales, paying bills too quickly, or collecting receivables too slowly. This ties into our comments above on yor efficiency ratio (Investigatinganswers, 2012). c. Working Capital for the past year reflected a negative balance almost 8.5m that will ill impact on banking institutions percentage against planned activities.4. ProfitabilityNewGens final exam analysis was on CanGos profitability looking at your relapse on Assets and Sales. CanGos return on assets reflected a .023 indicative that your to a greater extent asset-intensive and must reinvest more money to continue generating earnings (About.co m, 2012). Similarly, CanGos beget on Sales (ROS) was .17 (Investopedia, 2012).