Debt utilization Ratio

Debt Management ratios help to evaluate a company's long-term solvency measuring the extent to which

The company is using long-term debt. This ratio reflects how effectively a firm is managing its debts.

Debt to total asset Ratio

Debt to total asset Ratio

Year 2019 2020
FU- WANG’ 0.31 0.30
APEX FOODS 0.58 0.46
FINE FOODS 0.04% 0.05%

Debt to total asset Ratio

0.58%
0.60%

0.50% 0.46%

0.40%
0.31% 0.30%
0.30%

0.20%

0.10% 0.04% 0.05%

0.00%
2019 2020

Fuwang-Food Apex-Foods Fine-Foods

Long-Term Debts Situation Before & After COVID-19

The debt ratio indicates how much of a company's assets are provided through debt or the percentage of
the firm’s assets financed by creditors. Total debt includes both current liabilities and long term liabilities.
Creditors prefer low debt ratios, because the lower the ratio, the greater the cushion against creditor’s
losses in the event of liquidation. The owners on the other hand can benefit from leverage because it
magnifies earnings, and thus the return to stockholder. But, too much debt often leads to financial difficulty,
which eventually might cause bankruptcy. FU-WANG has good controlled over debt ratio. In 2019 debit ratio
was 30.79% where in 2020 debit ratio was 31.30%. After COVID 19 debt ratio slightly increased. For APEX
food in 2019 the ratio was 0.58% and in 2020 it slightly decreased to 0.46%. For Fine Foods ratio was 0.04%
in 2019 and in 2020 it was 0.05 %.

Asset Utilization Ratio

Asset management ratio is a set of ratios that measure how effectively a firm manages its assets compared
to its sales. These ratios are designed to find out whether the total amount of each type of asset as reported
on the balance sheet appear reasonable, too high, or too low considering current and projected sales levels.
Asset Management Ratio is done based on inventory turnover ratio, receivable turnover, average collection
period, fixed asset and total asset turnover ratio.

Receivable Turnover Ratio

Receivable Turnover Ratio

Year 2019 2020
FU- WANG’ 1.15 9.59
APEX FOODS 13.99 14.2
FINE FOODS 7.23 6.13

Receivable Turnover Ratio

16.00
13.99 14.20
14.00

12.00
9.59
10.00

8.00 7.23
6.13
6.00

4.00

2.00 1.15

0.00
2019 2020

Fuwang-Food Apex-Foods Fine-Foods

Asset Utilization Situation Before & After COVID-19

The accounts receivable turnover ratio, also known as the debtor’s turnover ratio, is an efficiency ratio that
measures how efficiently a company is collecting revenue – and by extension, how efficiently it is using its
assets. The accounts receivable turnover ratio measure.es the number of times over a given period that a
company collects its average accounts receivable. A high ratio is desirable, as it indicates that the company's
collection of accounts receivable is frequent and efficient. FU-WANG has a lower accounts receivable
turnover ratio which is not good for company. In 2020 Fu-Wang increases 9.59 times compare to in 2019
1.15 times which indicated that FU-WANG able to pay their debts quickly. In 2020 APEX Food’s receivable
turnover increased 0.21 %, from 13.99 in 2019 to 14.2 %in 2020.which is a good sign for the company.
FINE FOOD’S receivable turn over decreased little bit in 2020. From 7.23 in 2019 to 6.13 in 2020.

Inventory Turnover Ratio

Inventory Turnover Ratio

Year 2019 2020
FU- WANG’ 1.87 1.39
APEX FOODS 1.71 1.41
FINE FOODS 0.69 0.58

Inventory Turnover Ratio

2.00 1.87
1.80 1.71

1.60
1.39 1.41
1.40
1.20
1.00
0.80 0.69
0.58
0.60
0.40
0.20
0.00
2019 2020

Fuwang-Food Apex-Foods Fine-Foods

Inventory Turnover Ratio tells how often a business's inventory turns over during the course of the year.
Inventories are the least liquid form of asset and a high inventory turnover ratio is generally positive. On the
other hand, an unusually high ratio compared to the average for the industry could mean that the business is
losing sales because of inadequate stock on hand. FU-WANG has a very low inventory turnover ratio which is
not good for the company. In 2020 inventory turnover ratio decreases to 1.39 times compare to 2019 ratio
1.87 times. Apex Food’s Inventory turnover for 2019 was 1.7 and in 2020 it was 1.41 For Fine Food’s it was
0.69 in 2019 and 0.58 in 2020. As we can see for three of the companies after Covid 19 scenario was not that

great as their Inventory turnover decreased in 2020. Which is not a good sign.

Fixed Asset Turnover Ratio

Fixed Asset Turnover Ratio

Year 2019 2020
FU- WANG’ 0.75 0.58
APEX FOODS 4.02 3.18
FINE FOODS 0.63 0.66
 Fixed Asset Turnover Ratio
4.50
4.02
4.00

3.50 3.18
3.00

2.50

2.00

1.50

1.00 0.75 0.63 0.66

0.58
0.50

0.00
2019 2020

Fuwang-Food Apex-Foods Fine-Foods

Fixed assets turnover ratio measures how effectively the firm uses its plant and equipment to help
generate sales. So, fixed Asset Turnover ratio measures the amount of sales generated for every dollar's
worth of fixed assets. The fixed asset turnover ratio is calculated by dividing sale by total fixed assets.
Fixed asset turnover ratio for Fu-wang in 2019 is 0.75 & in 2020 is 0.58. Fu-Wang was unsuccessful in
utilizing its revenue generating assets. But for Apex Food’s it is a good sign that utilization of asset in
generating sales increased. Moreover the increase of the ratio is very marginal that indicates the
company is maintaining their asset properly. COVID19 has affected Fu - wang foods and Apex Food’s
total asset turnover ratio for which they can’t generate sales as expected comparing to previous year.
But for Fine food it slightly increased from

0.63 in 2019 and 0.66 in 2020.

Total Asset Turnover Ratio

Total Asset Turnover Ratio

Year 2019 2020
FU- WANG’ 0.25 0.19
APEX FOODS 1.02 1.29
FINE FOODS 0.33 0.28

Total Asset Turnover Ratio

1.40 1.29

1.20
1.02
1.00

0.80

0.60

0.40 0.33
0.25 0.28
0.19
0.20

0.00
2019 2020

Fuwang-Food Apex-Foods Fine-Foods

Total Asset Turnover ratio measures the amount of sales generated for every dollar's worth of total
assets. The total asset turnover ratio is calculated by dividing sale by total assets. Total Asset turnover of
FU-WANG not stable during the period 2019-2020 compare to industry average 1.5 times. COVID- 19 has
affected FU-WANG as total asset turnover ratio decreased in 2020. Fine Food’s was also affected by
Covid- 19 situation as their total asset turnover asset decreased. On the other hand 2020 was a better
year for Apex Foods as their total asset turnover ratio increased than 2019.
DuPont analysis
The DuPont system of analysis used to dissect the firm’s financial statements and to assess
its financial condition. It merges the income statement and balance sheet into two summary
measures of profitability, return on total assets (ROA) and return on common equity
(ROE).

DuPont analysis for FU-WANG Ltd as follows:

DuPont analysis = net profit margin x asset turnover x equity multiplier

DuPont Analysis
Year 2019 2020
FU- WANG’ 3.72% 1.47%
APEX FOODS
FINE FOODS 5.03% 0.15%