inancial Ratios This section will consider one ratio from the five major categories. All the figures were extracted from www.rossstores.com Liquidity Ratio-Current Ratio Current Ratio= Current Assets/ Current Liabilities Ross Stores Current Ratio 2017=$2, 813, 049/ $1,752,506= 1.60 Ross Stores current Ratio 2016=$2,372, 196/$1, 602,847=1.50 Ross Stores Current Ratios 2015=$2,249,839/$1,659,368=1.40 Implication: From the above analysis, it is evident that Ross Stores’ can meet the short-term obligations without difficulties since in all the three years under review, the company had a current ratio of more than one (Peterson, 2017). Also, the most appealing thing is that the company’s liquidity position has been improving over time. The high liquidity of Ross Stores means the company can easily secure a debt to finance the global strategy since lenders have …show more content…
Besides. The profit margin of the company has been relatively stable over the three years of analysis. High profit margins mean more dividends for the shareholders and therefore, in case Ross Stores decides to finance the global strategy through equity financing, it will have an easy time. Activity Ratios: Total Asset Turnover Total Assets Turnover= Sales/Total Assets Total Assets Turnover 2017= $12,866,757/$5,309,351=2.42 Implication: Given that the average total assts turnover for the retail industry is 2.06, it is prudent to state that Ross Stores uses its assets more efficiently than other players in the industry. A history of efficiency will appeal to lenders while Ross Stores sources for money to finance the global strategy. Leverage Ratio: Debt to Equity