Debt To Equity Ratio Of Diamond Drillers Inc

2) The higher ratio of Debt to Total Equity may result to the lower of the debt credit rating. The lower of the credit rating will result to increase of the interest rate which will cost more to the company.

Total asset turnover : This ratio measures the efficiency of a company’s use of its assets

Debt to Equity Ratio of 1.23 more than 1 reveals that more than half of assets are financed by debt.

In general, a high inventory turnover ratio is better than a low ratio. A high ratio implies good inventory management. A very low level of inventory has serious implications. It adversely affects the ability to meet customer demand as it may mot cope up with its customer requirements.

The inventory turnover ratio "measures the number of times on average the inventory sold during the period; computed by dividing cost of goods sold by the average inventory during the period" (Kimmel et al, 2007, p. 292). This indicates how quickly a company sells its goods and a high ratio "suggests that management is reducing the amount of inventory on hand, relative to sales" (Kimmel et al, 2007, p. 287).

5. Inventory Turnover: This ratio is rendered by taking the cost of goods sold, for a time period, divided by average inventory. This shows how many times a firms inventory is sold and replaced during the period of time that it is calculated for.

Debt to total assets ratio measures the percentage of assets financed by creditors (not stockholders). Debt finance is more risky than equity finance because they must be paid whether a company is doing well or not. Tootsie Roll has a 28% debt to total assets ratio while Hershey’s is 71% indicating that Hershey is taking a higher risk.

Return on Total Assets was 4.43% which is below five percent. That indicates that the company is not accurately converting its assets into profit. The total for Return on Stockholders’ Equity was 8.89%, however financial analysts prefer ROE to range between 15-20 %. The company’s low ROE indicates that the company is not generating profit with new investments. Lastly, Debt-to-Equity ratio for the company was 1.01 which indicates that investors and creditors are equally sharing assets. In the view of creditors, they see a high ratio as a risk factor because it can indicate that investors are not investing due to the company’s overall performance. The totals of these three ratios demonstrate that the company’s financial state is not as healthy as it should be.

Overall regards to liquidity ratios, the higher the number the better; however, a too high also indicates that the firms were not using their resources to their full potential. Current ratio of 1.0 or greater shows that a company can pay its current liabilities with its current assets. JWN’s ratio increased from 2.06 in 2007 to 2.57 in 2010, and slightly decreased to 2.16 in 2011. JWN’s cash ratio increased significantly from 22% in 2007 to 80% in 2010. JWN has a cash ratio of 73% in 2011, which is useful to creditors when deciding how much debt they would be willing to extend to JWN. In addition, JWN also has moderate CFO ratio of 46%, indicating the companies’ ability to pay off their short term liabilities with their operating cash

When it comes to the debt ratio, it is important to note that it remains one of the ratios lenders take a special interest in. Indeed, according to Brigham and Ehrhardt (2010), "creditors prefer low debt ratios because the lower the ratio, the greater the cushion against creditors' losses in the event of liquidation." Ideally, a company's debt ratio should be less than 1 as this would be an indicator that the company has a lower proportion of debt relative to its assets. In the above scenario,

The debt-to-capital ratio gives users an idea of a company's financial structure, or how it is financing its operations, along with some insight into its financial strength. The higher the debt-to-capital ratio, the more debt the company has compared to its equity. Star River has always depended much on debt for its financing and the trend shows this ratio may get higher in future. Star River, with high debt-to-capital ratios, compared to a general or industry average, may show weak financial strength because the cost of these debts may weigh on the company and

Long-term solvency for Ford Motor Company also appears to be strong. The company’s times interest earned ratio of 1.96 means that it can cover its interest charges on current debt issues almost two times over. This is a good sign that bankruptcy is not eminent and the company is solvent in the long-run. A higher debt to equity ratio means a company gets a larger portion of its financing from creditors than shareholders, though higher is a subjective measure and depends on the industry. (Wahlen et al, 2008) Automotive manufacturers tend to have debt to equity ratios above 2 because the industry is capital intensive. (Debt/equity ratio, 2014) Ford’s debt to equity ratio in 2011 was 10.89, far higher than the industry standard, potentially due to the circumstances of the time. The financial crisis of 2008 resulted in major financial bailouts across the automotive industry. These large levels of debt to the government would increase the debt to equity ratios of all companies that accepted the money.

If this ratio is high means company owns too many debts which may decrease their

In this ratio he explains about the three types of business inventory like raw materials, work in progress and finished goods. Formula to find the inventory turnover ratio and average age of inventory is: - inventory turnover = costs of goods sold/average inventory, Average age of inventory = 360 days/inventory turnover ratio.

Whereas, accounts payables days have sharply declined to 64.2 days, notwithstanding the year 2010, when it was the longest period of 75.4 days for paying bills. In general, the slower the converting receivables into cash and the more difficult meeting short-term liabilities, then the lower inventory turnover and lower cash conversion cycle will be. This can be proved by the calculated figures. As it is shown the inventory turnover fell down from 4.95 in 2011 to 3.90 in 2013, while the industry average is 6.87. This indicates that company is not converting inventory into cash as quickly as it used to. Among Sime Darby’s competitors its stock turnover figure is the smallest, while Bousted Holding has the greatest