Financial Analysis of Peyton Approved: 2016 vs 2017

School: Southern New Hampshire University - Course: ACC 308 - Subject: Accounting

Miriam Williams Management Analysis Brief ACC 308 Milestone 1 Part 1 In reviewing Peyton Approved, 2016 and 2017 ratio analysis comparisons, the following table provides an insight into the financial strength and improvements that will be need to completed to expand operations in the coming year . Peyton Approved Ratio Analysis 20172016 Current Ratio (Working Capital)5.785.18 Quick Ratio4.894.60 A/R Turnover5.915.53 Inventory Turnover7.678.81 Gross Margin68%66% Return on Sales53%52% Return on Equity1%2% Return on Assets1%1% In 2017 the ratio shows that working capital has increased, from 2016, and Peyton Approved has enough cash and cash equivalents to meet the day to day operations and their short

term obligations. Although the return on sales improved by 1% in 2017, yet in order to expand, comparing other competitors to get a better understanding of how much of the market we will need to stay competitive would need to be evaluated. The gross margin only improved by 2% in 2017 and if we stay on that path then we will have a stronger foundation for expanding and being able to cover day to day operations for the two locations until location two can stand on it's own feet. The 2017 quick ratio increase of 29% suggests the possibility of converting some assets into needed cash flow if we come across a rough patch. Peyton Approved trend analysis shows that 2017 has seen improvements that will be strengthen the companies position to pay their short-term debts and obtaining cash from assets. In 2016 the accounts receivable turnover was 5.53 and in 2017 we see the increase to 5.91, which is an improvement the company has with extending credit to clients and in return the clients are paying in a timely fashion. The return on equity faltered by 1% in 2017 from it's 2% in 2016 ration analysis. This will need to be improved if they want to continue attracting investors. The return on assets for 2016 and 2017 are stable, yet research will need to be completed on how to improve generating revenue to see higher profits. The stability of return on assets could factor in with the inventory turnover declining by 1.14 in 2017 at 7.67 from 8.81 in 2016. Researching inventory sales and finding what product(s) are not selling within their margin will need to re- evaluated and a solution completed. 'The periodic interest rate is the annual interest rated divided by the number of compounding periods.' (Kopp, Carol 2020) Reviewing the companies compounding periods will assist in how quickly the investments will grow to be of benefit financially. 'A high interest rate reduces the net present value of money because future cash flow will be discounted at a higher rate.' (Akan & Tevfik, 2020)

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Peyton Approved follows the GAAP mandates to maintain the guidelines required to produce accurate financial records. Maintaining a higher standard to provide our investors, shareholders and employees the best possible outcome for the stability and integrity of our company is a priority. Without those to believe in us, support us, and assist us, we would not be moving forward to provide these opportunities for others. REFERENCES 1.Kopp, Carol M., Nov. 30, 2020: investopedia.com/terms/p/periodic_interest_rate.asp 2.Akan, M. & Tevfik, A.T., 2020. Fundamentals of Finance.