Nancy’s coffee is just one of the business ventures that are facing the dilemma of being in the entrepreneurial industry for quite some time and yet searching for broader horizon and higher aims in the commerce path, particularly in the pecuniary benefit aspect. The financial statements are used in examining trends in key financial data, comparing financial data across companies, and analyzing financial ratios to assess the financial health and future prospects of the company. The ratios provide indicators of how well the company and its operations are performing. The current ratio for 2001, 2002 and 2003 are at 12.84%, 19.94% and 15.77%, respectively. It is a liquidity ratio that measures whether or not a company has enough resources to pay its short-term debt over the next business cycle by comparing firm's current assets to its current liabilities. The increasing trend of the current ratio from 2001 to 2002 suggests that the company is capable in paying its short-term obligations. However, it can also be a signal that the company has problems collecting its receivables or have long inventory turnover, both symptoms that the company may not be efficiently using its current assets. Thus, extensive substantive measures should be done. While the declining ratio may be a sign of deteriorating financial condition or it may be the result of eliminating obsolete inventories or idle current assets. But still, the current ratio at 2003 is above 2, the ideal ratio. The gross profit margin ratio consistently increased from 41.1% in 2001 to 41.6% in 2002 and 41.9% in 2003. This profitability analysis ratio measures how much from a company's revenue is available to cover overhead, other expenses and profits. A high gross profit margin indicates that the company can make a reasonable profit, as long as it keeps the overhead cost in control.
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