Business Plan on "Financial Summary Report: The Lemonade Stand Business"
Business Plan 4 pages (1640 words) Sources: 4
[EXCERPT] . . . .
It divides the current assets with the current liabilities. The current ratio for Juicy Lemonade's first season was 1.94 and that of the second was 5.24 and according to Bloomberg (2015), YUM's current ratio was 0.7($1,646/$2,411). This reveals that Juicy Lemonade is in a better position to pay its short-term obligations. The cash ratio of 5.24 in the second season is also higher than that of YUM, 0.4, which also indicates that Juicy is more liquid.It is also important to compare the debt to equity ratio to measure the long-term solvency of the two firms. Juicy Lemonades financial statement shows this ratio declined significantly from the first season to the second with a drop from 0.242 to 0.12. The debt to equity ratio for YUM at the end of the period stands at 0.207($6,732/$32,521). This shows that YUM finances more with debt as compared to Juicy, as at the end of the period. Juicy Lemonade should maintain this low debt to equity ratio because too much debt financing may be translated to mean the company is risky. Furthermore, debt finance comes with too many conditions from lenders, which may be detrimental to the business.
Conclusion
The financial performance of Juicy Lemonade stand as at the end of the period is healthy and strong. Its assets generate good revenue for the business, most of its financing comes from retained earnings, and it has an impressive profit margin. Moreover, the current and cash ratios increased in the second season, portraying its liquid nature and its capability to meet its short-term obligations. However, there was significant decline in the return on equity from the first season, which may cause alarm to the shareholde
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How to Reference "Financial Summary Report: The Lemonade Stand Business" Business Plan in a Bibliography
“Financial Summary Report: The Lemonade Stand Business.” A1-TermPaper.com, 2015, https://www.a1-termpaper.com/topics/essay/financial-summary-report-lemonade/4495717. Accessed 29 Sep 2024.
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