Inner City

1058 Words Mar 16th, 2013 5 Pages
1. Financial Ratios---

• Liquidity Ratio: measure the availability of cash to pay debt.

Current Ratio = Current assets/ Current Liabilities
262,515/ 285,030= 0.92
There is a problem meeting its short term obligations

The best way to improve this ratio and better position the business to cover its short-term obligations is to better manage current liabilities (accounts payables). Generate more profit (cash) out of each sale by increasing profit (as long as it is competitive within the industry), reducing costs of goods sold (making the product with less cost or providing services with less costs) or finding efficiencies throughout the operating cycle.

• Asset Management Ratio: indicate how successfully a company is utilizing
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- Lag between time when they are paying their suppliers and employees versus time it takes to collect receivables from customers (30-60 days)
• Opportunities:
- Expand product range: go after different segments,
- Purchasing a computer to organize data and reduce needless paperwork,
- Increase market share by taking large orders,
- Hiring professional salesmen to ensure consistent growth and accountants/ consultants to identify problems and solutions: Lower cost of goods sold, lower expenses due to Walsh’s salary, and lower bad debt.

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