An Analysis of Last Year's Financial Statements Produced the Following

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The firm's liquidity position is virtually unchanged; however,the average collection period has deteriorated from 78 days to 101 days.Inventory turnover has remained stable (4.7 versus 4.4).
The firm is currently turning over its fixed assets more rapidly (9.5 versus 6.4).The increased fixed asset turnover may suggest that the firm has reduced its fixed assets or has been able to generate more sales for a given amount of fixed assets.
There has also been an improvement in profitability.Both the operating and net profit margins are higher,and the return on assets and return on equity are also higher.
Debt ratio declined slightly.Debt is now financing 31.5 percent of assets while previously debt financed 35.5 percent of assets.Times-interest-earned has also slightly improved.
The payout ratio rose from 41.4 percent to 43.6 percent.Since the firm's profitability increased,this suggests that the management raised the cash dividend.One implication of a higher dividend is that management expects the increased profitability to be maintained.Managements often increase dividends only if they anticipate that increased profitability will be sustained.

An Analysis of Last Year's Financial Statements Produced the Following

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