Braithewaite & Co. Company Financial Analysis

2 Braithewaite & Co. Company Financial Analysis Ratio Analysis The ratios to be analyzed for proper judgment of the rolling stock industry are the cash ratio, quick ratio, current ratio, current assets turnover, inventory turnover, debtor turnover, credit turnover, debt-equity ratio, interest coverage ratio, gross profit margin, operating profit ratio, pre-tax profit ratio, net profit ratio, operating ratio, and earnings per share. Generally, the ratios can be classified into liquidity, activity, leverage, profitability, and valuation ratios.

Liquidity Ratios Liquidity ratios assess the capacity of a company to repay its short-term obligations. The ratios include cash ratio, quick ratio, and current ratio. Braithewaite & Co. had a cash ratio of 0.0944 in 2015, which increased to 0.3292 in 2019. Also, the company’s quick ratio increased from 1.0992 in 2015 to 1.5131 in 2019. The current ratio also increased from 1.3491 in 2015 to 1.8528 in 2019 (Kumar & Dhingra, 2022). The increase in liquidity ratios implies that the company's capacity to repay short-term obligations is increasing.

Activity Ratios Activity ratios show how efficiently Braithewaite & Co. Company uses its assets to enhance its operations. The activity ratios include current asset turnover, inventory turnover, debtor turnover, and credit turnover. The current asset turnover of the company increased from 0.8092 in 2015 to 1.5625 in 2019. The inventory turnover increased from 4.6 in 2015 to 8.057 in 2019. The debtor turnover increased from 1.2396 in 2015 to 3.6130 in 2019 (Kumar & Dhingra,