Exhibit 4 Ratio Analysis On Olallieberry Pie Company

Exhibit 4ratio Analysis On Olallieberry Pie Company Opchistorical F

Exhibit 4 provides a comprehensive ratio analysis and internal factor assessment summary (IFAS) for Olallieberry Pie Company (OPC), examining its financial health, operational efficiencies, competitive position, and strategic strengths and weaknesses over several fiscal years. The analysis evaluates liquidity, profitability, activity, leverage, and other key financial ratios, complemented by an internal factor analysis that identifies core competencies and critical weaknesses influencing OPC's future prospects. This detailed evaluation aims to inform strategic decision-making, investor sentiment, and operational improvements necessary for OPC's sustained growth and competitive advantage.

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Introduction

Olallieberry Pie Company (OPC) stands as a notable player within the specialty bakery sector, distinguished by its unique product focus and strong internal competencies. The company’s financial and strategic analysis, as presented through ratio analysis and internal factor assessments, reveals critical insights into its operational efficiency, financial stability, competitive positioning, and areas needing strategic attention. This paper synthesizes the ratio analysis data with the internal factor strengths and weaknesses to evaluate OPC's current status and future outlook, emphasizing the implications for stakeholders and strategic planning.

Financial Ratios and Liquidity Evaluation

The liquidity ratios reflect OPC’s short-term financial stability. The current ratio over the years remains close to 1.02, indicating that the company's current assets are just sufficient to cover its current liabilities. The quick ratio, at approximately 1.80, suggests that OPC has a reasonable capacity to meet its immediate obligations without relying heavily on inventory liquidation. The cash ratio, notably high at around 7.02, implies substantial cash reserves relative to current liabilities, enhancing OPC's liquidity buffer. However, the inventory to net working capital ratio is low at 0.13, signifying efficient inventory management with minimal tied-up capital, likely a strategic advantage.

Profitability metrics show positive trends, with net profit margins rising from 4.0% to 4.9% over the observed years, indicating improved cost control and revenue generation efficiency. The gross profit margin similarly improves, from 23.0% to 27.9%, underscoring effective pricing strategies and cost management in raw materials and production. Return on investment (ROI) and return on equity (ROE) exhibit fluctuations but generally trend upward, with ROI hovering near 10%, indicating efficient capital utilization, and ROE indicating strong shareholders' value creation, with values around 16%. Earnings per share (EPS) growth reinforces positive investor returns.

Activity ratios reveal operational efficiencies. Inventory turnover remains steady at approximately 3.4, suggesting effective inventory management. The number of days of inventory (around 91 days) aligns with the industry standard, balancing holding costs with sales pace. Net working capital turnover at about 12 shows efficient utilization of working capital. Asset turnover ratios indicate that OPC effectively uses its assets to generate sales, further supported by a fixed asset turnover of around 3.9. The accounts receivable turnover of 69.5 and an accounts receivable collection period of approximately 5.8 days suggest strong credit policy management, enabling quick cash inflows. The accounts payable period, slightly over 20 days, indicates timely supplier payments.

Leverage ratios highlight OPC's financial structure. The debt to asset ratio fluctuates around 63-68%, indicating significant leverage, but not excessively risky. The debt to equity ratio suggesting the company relies substantially on debt financing (around 75-76%). The times interest earned ratio exceeds 46, demonstrating OPC’s strong capacity to meet interest obligations. The long-term debt to capital structure hovers around 19.5% to 33.88%, reflecting manageable long-term liabilities. Current liabilities to equity around 35% shows a balanced approach towards short-term obligations. Overall, OPC exhibits a sturdy financial position with adequate liquidity and leverage in line with industry standards.

The valuation ratios, including a Price/Earnings (P/E) ratio of approximately 6.83 and dividend yield around 1%, reflect the company's stock valuation relative to earnings and dividend returns. The dividend payout ratio is modest, increasing from about 5% to 12%, indicating a gradual shift toward returning more capital to shareholders.

Strategic Internal Factor Assessment

The internal factor analysis (IFAS) highlights OPC’s core strengths and weaknesses affecting its strategic positioning. The company’s strengths include highly competent senior leadership (weighted score of 0.675), whose strategic vision and operational expertise contribute significantly to sales growth and industry leadership. Strong supplier relationships (weighted score of 0.45) enable OPC to maintain a cost advantage, saving the company approximately $20-$40 million annually through just-in-time logistics and high-quality raw materials.

Product quality and uniqueness emerge as moderate strengths, with a high rating (4.0) but low weight (0.20), emphasizing the unique olallieberry product that commands premium pricing and customer loyalty. Employee relations receive a very high rating (4.6), supporting efficient operations and cost savings. OPC’s corporate culture, rated at 5.0 with a weight of 0.20, is considered an indisputable core competence that delivers significant cost and productivity benefits, giving OPC an edge over competitors.

Conversely, the internal weaknesses are notable. The outdated Management Information System (MIS) poses a critical risk, with a low rating of 2.0 and high weight (~0.20), potentially impacting operational efficiency and decision-making. Limited marketing efforts restrict growth opportunities, with a very low rating (1.5) and a small weight (0.075). Distribution channels are confined geographically, mainly in western states, limiting expansion potential, which could result in a $100 million sales loss if unaddressed. Financial misposition, deterioration in ROI, and increased debt levels denote a fragile financial foundation, necessitating strategic restructuring. R&D deficits further threaten long-term innovation and market share; OPC’s weak R&D results could cost the company significant future sales.

Total weighted internal scores illustrate that OPC’s strategic position is driven predominantly by its strengths, especially leadership, supplier relations, culture, and employee relations. However, weaknesses in MIS, marketing, distribution, financial health, and R&D quality require urgent strategic intervention to leverage strengths for long-term growth.

Implications for Strategic Management

The ratio and internal factor analysis together reveal a company with robust internal competencies and significant market advantages but facing vulnerabilities that could hinder sustainability. The company's healthy liquidity and profitability ratios suggest resilience in managing operational costs and generating profits. However, outdated technology systems, limited marketing reach, and distribution constraints threaten future revenue streams and growth potential. Strategic priorities should focus on investing in modern ERP systems, expanding marketing capabilities, and developing broader distribution networks both domestically and internationally.

Fortifying financial stability through debt management and optimizing capital structure will enable OPC to fund growth initiatives. Additionally, investing in R&D will be crucial for product innovation, especially given the company's reliance on its unique olallieberry offering. The strong internal culture and leadership should be leveraged to foster innovation and expansion, aligning operational improvements with strategic growth plans.

Conclusion

The financial ratios and internal factors analysis depict OPC as a company with solid internal competencies and positive financial health but with pressing vulnerabilities that risk undermining its market position. Addressing weaknesses in outdated systems, marketing, and distribution, while capitalizing on leadership strength, supplier relations, and corporate culture, will be vital. Strategic planning that lines up operational improvements with market expansion and product innovation is essential for OPC’s sustained growth, competitiveness, and shareholder value in an increasingly dynamic marketplace.

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