University of Regina Club: Financial Statement Analysis Case Study Solution
In addition to this, the current and quick ratio of the company is below 1,which is reducing from year to year,indicating that the company is not able to generate cash, hence demonstrating the poor financial health of the company. Since, the total asset turnover ratio shows an increasing trend; the company is efficient in using its assets. Significantly, the low collection period shows that the company would be efficient in collecting payments. The decreasing trend in the average inventor turnover represents that the company is holding the inventory longer as compared to the previous measured period of time. A higher debt ratio indicates that the company has the possibilities to face difficulty in borrowing money to finance the business operations in forthcoming years. Besides, a high or increasing debt to equity ratio indicates that the University has been aggressive in financing its growth in future with debt, hence the company is not able to generate cash for satisfying its debt obligations. Furthermore, the decreasing gross profit margin shows that the company is receiving less on the provided services.
Future potential of university or Regina club
On the basis of the financial analysis, it is evaluated that the total sales of the club are reducing due to the increased selling and general expenses, so it is recommended that the university should introduce additional value added services in order to attract the members with the best means of advertisement and cut the selling and general expenses. The university should strive to attract the maximum number of members at low membership fee. Closing the club would not last good and positive impact about the reputation of the university as a whole, and it would result in layoff of long term valuable workforce. Also, by increasing the fee of membership, the existing member would be dropped out, hence reducing the total membership revenue…………
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