The quarterly financial statement of Medbox shows that the gross profit levels of the company are negative and hence the gross profit ratios are negative. The present GP ratio for September 30th 2014 is around (5.91) which suggests that the company lacks financial profitability. (Refer to appendix 1) This also suggests that Medbox has no financial capability to pay for operating expenses like salaries, selling and marketing, research and development and general administrative expenses. The company shows consistently negative net incomes because despite the low gross margin ratios the company has incurred high operating expenses and low revenues that have led to loss from the operations. The return on assets ratio is around (0.36) which is also negative suggesting that the company is not able to manage its assets effectively to yield the greater amounts of income (Leach, 2010). (Refer to appendix 3)
The analysis of the balance sheet shows a number of unusual items like derivative liability, which increase the amount of liability of the company. The investments of the company are also nil in 2014 and 2012 showing low amount of assets. Hence from the analysis of the balance sheet it can be confirmed that the company has a low liquidity position. The low liquidity position and the negative revenue shows that the company is not in a condition to pay short or long term debts and is advisable to increase the sales of the medicine storage devices in order to attain a stable financial position (Skov Jensen, 2011).
Leach, R. (2010). Ratios made simple. Petersfield, Hampshire: Harriman House.
Skov Jensen, H. (2011). Recommendations & financial ratios 2010. Copenhagen: The Danish Society of Financial Analysts.
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