Balance Sheet and Income Statement Commentary

ACC/291 March 25,2012   Liquidity Ratios Current Ratio: Current Assets/Current Liabilities 2005 $14,555,092/ $6,974,752= 2.09:1 2004 $14,643,456/ $6,029,696=2.43:1 Acid Test Ratio: Cash+ Short-Term Investments + Receivables (Net)/ Current Liabilities 2005 $305,563 + $283,583 +$6,133,663/ $6,974,752= .96:1 2004 $357,216 + $133,504 + $5,775,104/ $6,029,696=1.04:1 Receivables Turnover: Net Credit Sales/ Average Net Receivables 2005 $50,823,685/ ($6,133,663 + 5,775,104/2) $50,823,685/ $5,954,384= 8.54 times 2004 $46,044,288/($5,775,104+6,569,344/2) $46,044,288/ $6,172,224=7,46 times Inventory Turnover: Cost of Goods Sold/ Average Inventory 2005 $42,037,624/ ($7,850,970+$7,854,112/2) $42,037,624/$7,852,541=5.35 times

Two-year decrease of liquidity measures including current ratio and quick ratio reveals the problems concerning company’s short-term solvency and liquidity. Butler Lumber Company’s current ratio decreased to 145.05% in 1990 from the level of 180.00% in 1988. The same decrease happened to quick ratio (decreased from 88.08% in 1988 to 66.92% in 1990). As the short-term lender, Northrop National Bank should have noticed that Butler Lumber Company’s ability to pay its bills over the short run without undue press needs to be carefully examined. The decrease of current ratio also implies the decreasing level of company’s net working capital, which is another sign of lower level of liquidity.

An organization’s current ratio shows how liquid the assets of the agency are by comparison to the short term debts that the agency must pay to continue its operations. This ratio is calculated by taking the assets that can be converted to cash within a year (current assets) and dividing it by the liabilities that are either currently due or will become due within a year (current liabilities). The current ratio, ideally, should be at

First of which, is the current ratio. It has been rapidly declining since 2000. To me this indicates that there is a liquidity issue. Each year their trade debt increase exceeds the increase of net income for the company. As a result, the working capital has taken a nosedive from $58,650 in 2002 to only $5,466 in 2003.

Increase in current liabilities Substantial increase in current liabilities weakened the company’s liquidity position. Its current liabilities were US$2,063.94 million at the end of FY2010, a 48.09% increase compared to the previous year. However, its current assets recorded a marginal increase of 25.07% - from US$1,770.02 million at the end of FY2009 to US$2,213.72 million at the end of FY2010. Following this, the company’s current ratio declined from 1.27 at the end of the FY2009 to 1.07 at the end of FY2010. A lower current ratio indicates that the company is in a weak financial position, and it may find it difficult to meet its day-to-day obligations.

This ratio is similar to current ratio, except that it excludes inventory from current assets. Inventory is subtracted because it is considered to be less liquid than other current assets, that is, it cannot be easily used to pay for the company’s current liabilities. A company having a quick ratio of at least 1.0, is considered to be financially stable. It has sufficient liquid assets and hence, it will be able to pay back its debts easily (Qasim Saleem et al., 2011).

Debt-to Asset Ratio indicates that 48% of AMT's assets money comes from creditors (1985). In addition, the low current ration implies lack of liquidity (1.78 for 1986). Therefore, the company needs to rely heavily on outside financing to meet maturing obligations since there is no operating income.

The answer will be 1 .34 . this is a good sign that the company will be able to pay its obligations when they fall due . Based on both current ratios above , Sears company has a better current ratio at 1 .94 when compared with the current ratio of Walmart of only 1 .34 .B Sears Acid Test ratio Quick Assets 20201 1 .279354 Current Liabilities 15790 The quick assets are arrived at by adding the cash , cash equivalents ,receivables and marketable securities . The quick ratio is arrived at dividing the quick assets for the year 2007 of 20 ,201 . The quick ratio is 1 .28 times .Walmart Acid Test ratio Quick Assets 2423 0 .167566 Current Liabilities 14460 The quick ratio here is arrived at by dividing the quick assets of 2 ,423 for the year 2007 by the current liabilities amounting to 14 ,460 for the same year . The acid test ratio or quick ratio is .17 Based on the above data , Sears has a better quick ratio with its higher rate of 1 .28 as compared to the quick ratio or acid test ratio of Walmart at only .17 .C SOLVENCY LEVERAGE RATIOS Ability to pay long term obligations Sears 38700 The ratio of .85 . This shows that the company will be able to pay its obligations when the time of payment arrives .Walmart 45384 The Walmart will be able to pay its obligations when they

Lawsons 2010 and 2011 current ratio are above the industry average (1.8:1) however in 2012 the current ratio falls below the industry average at 1.55:1 and than again in 2013 to 1.02:1. This indicates that the company’s ability to pay its debts is

Landry’s Debt to Asset ratio also increased from year 2002 to 2003. In 2002 Landry had a debt to asset ratio of 0.39. In 2003 Landry’s debt to asset ratio increased to 0.45. While both numbers are acceptable and considerably low, the increase from 2002 to 2003 could influence potential investors to not invest in Landry’s stock. This increase also suggests that Landry’s debt also increased from 2002 to 2003. Overall, while there was a slight increase from 2002 to 2003 Landry’s still had a good debt to asset ratio. We think that a contributing factor to the debt

The return on equity, ROE, is as high as 20.69% (above 15%). It illustrate that the RL Corporation uses the investors’ money pretty effectively. As of return of assets, equals to 13.10%, which reveals how much profit a company earns for every dollar of its assets. Both ROE and ROA for RL Corporation seems really good and they provide a picture that managers are doing a good job of generating return from shareholders’ investments.

This paper provides the horizontal and vertical analysis of the income statement and the balance sheet. Equally, financial ratios have been computed to show the leverage, liquidity, efficiency, profitability and the equity of the Hewlett Packard enterprises. Recommendations and conclusion have been made on the results depicted by the analysis. Lastly, an evaluation was made on the different ways that stakeholders utilize the financial statements.

The balance sheet and Income statement are the most important financial statements of the company that help conduct current analysis of company and evaluate its trends overtime. The balance sheet represents the company snapshots of its financial position on the last days of accounting period. Apple balance sheets, which represent a snapshot of its ending balances in asset, liability and equity account as of the date stated on the report, are changes each year from 2003 to 2014. On the other hand, the income statement shows its financial performance over 2003 to 2014. Apple basically ends its accounting period in September. Most of the long-term debts are in the form of the bonds. According to appleinsider.com, Apple recently issues a new euro bond worth about $2.26 billion with a maturity date on January 17, 2024 and coupon rate of 1.375% payable annually. The first payment will occur on January 17, 2016. Moody’s recently assigned a rating of Aa to Apple Inc. 's senior unsecured note issuance. Thus, Apple recent capital expenditure amount to 11,488 million according to morningstar.com. The analysis of financial statements is conduct to compare Apple with one of its closest rival Hewlett-Packard and twelve ratio were calculated. From table1 and chart1, the current ratio that determine the company ability to meet its short term obligation shows Apple’s current ratio is higher than that of Hewlett-Package from 2003 to 2014. That is, Apple is solvent than Hewlett Packard. Table

Financial results and conditions vary among companies for a number of reasons. One reason for the variation can be traced to the characteristics of the industries in which companies operate. For example, some industries require large investments in property, plant, and equipment (PP&E), while others require very little. In some industries, the competitive productpricing structure permits companies to earn significant profits per sales dollar, while in other industries the product-pricing structure imposes a much lower profit margin. In most low-margin industries, however, companies often experience a relatively high rate of product throughput. A second reason for some of the

The quick ratio of 1.46 is a further analysis into the actual monetary values that are highly liquid and excluding fixed assets as part of the assets. The CFO/Avg. current liabilities also show a healthy 73%, 28% in 2004, on average of which is still higher than the industry.