stock issued since inception of the corporation as of February 1, 1997 was $ 1.73. Ratio Analysis"There’s a saying that the nice thing about standards is that there are so many of them to choose from." (Maciag, 1998) It is important to choose carefully the ratios to be analyzed to be sure that there is relevance between the data and the conclusions drawn from it. When choosing industry standards, it is important to select like industries with commonalties that support comparison of results. It would not be appropriate to compare the financial statement of the cattle rancher with the financial statement of the meat processor even though the both derive their income from the beef industry. Their role in the industry is not the same. Their capital requirements, cash flows and profit margins are not comparable. In querying leading investor researchers, Standard & Poors, Thompson, and The Wallstreet Journal, the industry standards consistently mixed results from Toys "R" Us and other retailers with Mattel and Hasbro and others which are primarily manufacturers. While this is not ideal, these ratios are used here for comparison in the absence of other reliable standards. Ten year history from 1990 through 1999 with extensive ratio analysis is included in Appendix A. Analysis of the five years from 1995 through 1999 are included here with comparisons to the industry standards as available in the Spring of 1999. Graphs include nine to ten years of data as available.Short-term liquidityThe company’s short term liquidity of 1.24 in 1997 does not make it a desirable credit risk. "Many bankers and other short-term creditors traditionally have believed that a retailer should have a current ratio of at least 2 to 1 to qualify as a good credit risk." (Meigs, 1999) The company is equal to the industry standard however. Short term liquidity as measured by the quick ratio which excludes inventory and other short term assets (assumed to be p...
