Sue Sims (controller): I really need you to analyze Winco Construction Company and see if we should extend them credit for this project we are deciding upon. I want you to analyze their financial statements and review their financial ratios (liquidity, solvency, efficiency, profitability and market ratios). We really need to insure that this customer is worthy of credit and can pay for our services.
Scenario Steps to Completion You are to analyze various aspects of a customer firm and our firm; Stirm Windows Inc. and to perform various financial analysis tasks associated with the customer firm Winco Const. to ensure their financial strength is sufficient to justify several large orders received from the firm and an investment in the firm itself.
Some basic statistics are needed to assess the firm’s financial health, given the amount of business the two firms transact.
Calculate the appropriate ratios which should include the Dupont ratio among others.
Place the numbers into the following context of questions that Sue wants answered:
Are these ratios sufficient enough for you to evaluate our customer?
What do you conclude about the firm’s financial health and any change from 2013 to 2014?
Is this a firm we would feel comfortable extending significant credit to in the future?