Executive Summary

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Executive Summary
A summary of ratio analysis
Return on sales is used in accounting to evaluate the company’s operation efficiency and profitability. The obtained value provides an insight into the extent to which a dollar sale produces a profit. An increasing ROS signals more efficient growth within a company while the declining ROS indicates looming financial crises. According to Needles, Blverd, Powers, and Susan (32) the ratio measures the performance of a company. Creditors, investors, and other debt holder rely on the efficiency ratio since it clearly communicates the proportion of the Return on sales, also known as known as the operating profit margin is a ratio that used in operating cash that a company makes out of its revenue. The ratio also provides insight to potential dividends, and the company’s ability to service is debts. From Ratio Analysis of Potential Amusement Park Investments, we can deduce that Six Flag with the highest ROS (28.62%) is currently the most efficiency performing company and hence more profitable amongst the three categories. Cedar Fair follows as the second profitable with ROA OF 24.00% and finally Sea World Entertainment (13.55%).
Current ratio
Current ratio also known as working cash flow ratio is liquidity ratio that measures the company’s ability to pay both the short-term and the long-term obligations. The values assess the degree to which the company’s resources (current assets) can meet its short-term obligations (current liabilities).

The rule of thumb state that “the more the company’s current ratio, the more liquid the company is and hence ability to service it’s short-term obligation.” Similarly, analysis of the three Amusement park investments shows that six flag is the most liquid, followed by Cedar and lastly Sea World Entertainment.
Return on Equity (ROE)
ROE represent a percentage of shareholders equity returned as income. It is a measure of business profitability about the book value of shareholders. ROE estimate how many profitable dollars company generate from single shareholders equity. The investments, the results indicate that by ROE, Cedar Fair with the highest ROE is the most profitable. Still, Sea world entertainment ranked the lowest regarding profitability.
Debt-to- equity ratio
Debt to equity ratio is a liquidity ratio that measures the company financial leverage or debt ratio in assessing the financial riskiness of a company. The debt to equity ratio shows the relative proportions of debt and equity in business financing. The higher the company debt-to-equity, the higher the level of leverage meaning that such company is more exposed to potential financial crisis related to borrowing (Weil, Katherine & 57). The study findings here reveal that on the debt-to-equity ratio. Cedar Fair is the riskiest while six flat is demonstrated as the least more perilous (Srinivasan 13).
Earnings per share
EPS represents the percent of the company’s earning, net of a preferred stock dividend that is allotted to an individual shareholder or a holder of common stock. It measures the earning per outstanding share of common stock for a company. EPS I is the crucial financial ratio that indicates the profitability level of business.
Executive summary
Chart One: Ratio Analysis of Potential Amusement Park Investments
Six flags sea world entertainment cedar fair
1. Net income (net profit or net loss) $336,536,000
$197,873,000
$278,332,000
2. Return on sales 28.62%
13.55%
24.00%
3. Current ratio 1.298928221
0.643209625
1.027736998
4. Stockholders’ equity $661,440,000.00
$579,535,000.00
$479,469,000.00
5. Return on equity $0.51
$0.34
$0.58
6. Debt-to-equity ratio 283.24%
321.45%
325.12%
7. Earnings per share (basic) $4.72
$0.58
$8.57

Ratio Calculations and Answers (Excel spreadsheet)
Six Flags Sea World Entertainment Cedar Fair
INFORMATION FROM THE INCOME STATEMENT
Tota revenue $1,175,793,000 $1,460,250,000 1,159,605,000
Total Expenses $839,257,000 $1,262,377,000 881,273,000
INFORMATION FROM THE BALANCE SHEET
Current assets 300,924,000 142,204,000 203,717,000
Total assets 2,534,919,000 2,442,474,000 2,038,319,000
current liabilities 231,671,000 221,085,000 198,219,000
Total liabilities 1,873,479,000 1,862,939,000 1,558,850,000
Number of Shares of Stock 140,000,000 1,000,000,000 55,950,000
Net income (net profit or net loss) $336,536,000 $197,873,000 $278,332,000
Return on sales 28.62% 13.55% 24.00%
Current ratio 1.298928221 0.643209625 1.027736998
Stockholders’ equity $661,440,000.00 $579,535,000.00 $479,469,000.00
Return on equity 50.88%
$0.34 $0.58
Debt-to-equity ratio 283.24% 321.45% 325.12%
Earnings per share (basic) $4.72 $0.58 $8.57
Note:
Net income = Total revenue –Total expenses
Return on sales = (net income/ Total revenue)*100%
Current Ratio = current assets/ current liabilities
Stockholders’ equity = Total Assets –Total Liabilities
Return on equity = (net income/Stockholders’ equity)*100%
Debt –to-equity ratio = Total liabilities/stockholders’’ return
Earnings per share = Stockholders’ equity /the number of outstanding stock/equity shares

Work cited
Needles, Belverd E., Marian Powers, and Susan V. Crosson. Principles of accounting. Cengage Learning, 2013.
Srinivasan, T. “An Empirical Study of Profitability Analysis of Neyveli Lignite Corporation Limited (Nlc Ltd.).” Global Journal For Research Analysis 4.6 (2016).
Weil, Roman L., Katherine Schipper, and Jennifer Francis. Financial accounting: an introduction to concepts, methods, and uses. Cengage Learning, 2013.