Executive Summary After carrying out an audit of ratio analysis of HJ HEINS, a number of inferences can be drawn. The firm is operating profitably as the profitability ratios surpass the industrial average, and the trend is declining. The company, however, is not financially stable owing to its low current, quick, and debt ratios. On the other hand, it is effectively utilizing its assets to generate sales revenue. It has high inventory and accounts receivable turnovers, which may be high than the trend looks up toward a dangerous point. The management ought to improve the profitability, performance, activity, debt-paying ability, and liquidity through a cost reduction mechanism, adoption of a favorable credit policy, and a sound financing policy. They also need to invest in projects that generate positive net present values for the benefit of the shareholders. Introduction This report is based on financial ratio analysis is aimed at measuring the general performance of the company. The ratios would help users to get an in-depth understanding of the company’s profitability, capital structure, financing policies, financial stability, and efficiency with which it is utilizing its assets to generate sales revenue. For the management, their objective would be on how to improve on poor areas and maintain good performance. Its intended users are the management of the company, customers, employees, and the government, who would use it for taxation other regulatory purposes. The sources of the ratios used have been provided in excel, which is in the appendix, i.e., the Profit and loss accounts and the balance sheets of the past four years. Financial analysis report On profitability/ performance, it can be noted that the profitability of the HJ Heins is declining over time. This is shown by the Gross profit margin ratio, Return on Assets (ROA), Return on Equity (ROE), and the operating profit margin ratio. In 2005, the ROE declined to 0.425 from 0.472 in 2004 before declining further to 0.289 in 2006 before going up to 0.315 in 2007. The net profit margin ratio also inclined to 0.164 in 2005 from 0.143 in 2004. In 2006, it declined to 0.158 and then 0.129 in 2007. In 2005, the ROA inclined to 0.081 from 0.061 in 2004 before declining further to 0.071 in 2006 before going down to 0.066 in 2007. The Gross profit margin ratio also inclined to 0.367 in 2005 from 0.356 in 2004. In 2006, it inclined to 0.374 and before coming down to 0.358 in 2007. Even though the profitability of the company has been fluctuating, it is still positive results, but if the management does not take care, it will be worse. Liquidity and debt-paying ability, the current ratio indicates that the firm is financially stable and liquid with a ratio of 1.34:1, 1.409:1,1.462:1, and 1.705:1 for years 2007backward to 2004.from the trend it shows that the stability was coming down. This means that for every $1 of current liability, there are more than $1 of current Assets. The recommended ratio is 0.5:1, i.e., current assets should be twice as much as current liabilities. The quick Asset Acid test ratio also declines from 1.107:1 in 2004 to 0.994:1 in 2005, to 0.923:1 in 2006, and 0.808:1in 2007. The ratio indicates how able the firm is in meeting its financial obligations from the m