I.
STATEMENT OF THE PROBLEM
What is the financial
condition and financial performance of American Tools, Inc. for the first three
years of its operations? Did it perform well as compared to the standards of
the industry? Specifically, this problem aims to answer the following
questions:
1.
Is American Tools Inc. capable of
ready conversion into cash to meet demands for additional investments and
services?
2.
Is the company capable of covering
current liabilities quickly with current assets to secure creditors and
shareholders against losses?
3.
Is the capital of the company
frozen to machineries and equipments? Are the assets used efficiently?
4.
Is the net income of American
Tools Inc. enough to satisfy investors’ dividends and rate of return
expectations and to support the growth of the company?
II.
OBJECTIVES
1. To understand how well
the financial statements of American Tools Inc. presented the financial
strengths and weaknesses of an organization.
2. To measure the financial
soundness of the company through ratio analysis and compare it to the industry
standards.
3. To evaluate the business
performance of the company and to recommend ways to improve its current
financial status.
