The acid test is an exceptional means of determining the liquidity of cash. 3. Current Ratio: Take current assets over/divided by current liabilities for this straight forward ratio. Only main drawback is that this ratio excludes inventory, but the reason for that is because a lot of companies have difficulty with converting their inventory into cash. This can also lead to analysis being over or understated. This ratio, like the quick ratio/Acid Test, is an exceptional ratio for determining if a company can handle their short-term obligations.
Working capital is the money that a company has after paying off its current liabilities and with which it can finance its operating and working capital requirements. The higher a number the better a company is able to pay off its debt and have cash for meeting its financial obligations. The current ratio is used to gauge a company 's ability to pay back its short-term liabilities (debt and payables) with its short-term assets (cash, inventory, receivables). The higher the current ratio, the more capable the company is of paying its obligations. A ratio under 1 suggests that the company would be unable to pay off its obligations if they came due at that point. The current ratio denotes the efficiency of a company 's operating cycle or its ability to turn its products into cash, which is a key requirement for business success. Quick ratio is an indicator of a company 's short-term liquidity. The quick ratio measures a company 's ability to meet its short-term obligations with its most liquid assets, essentially cash and cash equivalents. The higher the quick ratio, the better the financial position of the company in terms of its ability to meet its liabilities.
Week Nine Final Project: Analyzing Financial Statements HSM 260 Current Ratio Table [ 1 ] | | 2002 | 2003 | 2004 | Current Ratio | Current Assets | $104,296.00 | 0.75 | $82,058.00 | 0.87 | $302,902.00 | 0.43 | | Current Liabilities | $139,017.00 | | $93,975.00 | | $699,004.00 | | 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
CURRENT RATIO show a company’s ability to pay its current obligations that is company’s liquidity. The current ratio position is lower for Honda at 0.33 than for Toyota at 1.22 in 2010. Honda has a large portion of receivables in assets both in trade, notes receivables and finance receivables. It has a huge portion of cash as well. This indicates the company has no problem in terms of generating a positive influx of assets. But in terms of liabilities it has a large portion of short term debt which makes almost 1/3rd of total Current liabilities. Also there is a significant portion of Long Term debt. The higher level of liabilities in the denominator reduces the overall ratio.
a). |Account Balance |% change 2010-2011 |% Change 2009-2010 | |Net sales |1.45% |2.70% | |Cash |5.41% |-9.19% | |Net income |16.50% |-39.54% | |Accounts payable |37.09% |24.71% | |Inventory |26.23% |1.05% | b). |Ratio The decline of inventory turnover presents the incresed possibility of inventory obsolescence which is likely to be assessed as higher business risk. In debts to equity part, the ratio in current year is much higher than that of preceeding year, which means the extent of use of debt in financing company is much higher than before. Pinnacle has used most of its borrowing capacity and has little cushion for addional debt.This action brought high business risk to Pinnacle. In addition, Pinnacle puchase more inventory in current year that that of preceeding year, and net sales are increasing also compared previous year. However, the net income is decreased significantly. These changes show expenses (maybe direct or indirect) have increased dramaticly. The company uses more expensive materials and labors to manufacure and sell products.
In the 1900s and now, having a nice home in a beautiful community shows that your family can afford and keep affording to live at a high standard of living, shows power. During this time period for a african american family to own a home that is in a nice neighborhood would be a very big deal. Many white people were afraid that if black people moved into their neighborhoods their houses will decrease in value, crime rates will go up, and they were just scared. For an african american man having a home was a sign of success because they could afford a home and could keep it up. If a black family moved into a white neighborhood many times their white neighbors chased them out. Housing is a great way to show success, wealth, and power and the white communities are willing to do anything to keep their neighborhoods the same.
In 2016, the company has 8,970,824 US Dollars in Long Term Assets (Current Assets: 7,036,578), 146,947,000 US Dollars in profits, and 6,959,225 US Dollars in Total Liabilities (Current Liabilities: 2,689,770). The problem with Labilities is that it is debt that has to be paid off over a certain period of time and in this case for current liabilities, it is a year. Labilities are expected to be paid off with cash but that’s a problem for Cabela’s. Cabela’s has a cash flow of -51,241,000 US Dollars and a long term debt value of 3,158,085 US Dollars which means cash is limited for Cabela’s. The current Ratio is at 2.616 which means the company is not managing its assets a properly and in turn could be having financial issues.  What is also not a good sign is the debt to equity ratio is 3.460 and this value is a sign that the Cabela’s has a high debt level and is having financial troubles.  Then the Return on Sales Ratio is .04 or 4% which terrible because this percent should be over 10%. Another sign that a company is having trouble is that the Acid Test Ratio is 2.30 because the ratio value should never be over 1. These troubling financial records shows that Cabela’s is having troubles but the real certain are in the direction of the
This data set is divided into three categories, this paper compares only three ratios for each category; Solvency Ratios: Quick Ratio, Current Ratio, and Current Liabilities to Inventory Ratio; Efficiency Ratios: Collection Period Ratio, Assets to Sales Ratio, and Accounts Payable to Sales Ratio; Profitability Ratios: Return on Sales Ratio, Return on Assets, and Return on Net Worth.
Last four digits of student ID #: Name of the business: Dawson Lumber Company Nature of the business: Wholesale Lumber Business Marketing Analysis: The Dawson Lumber Company was founded in the 1870s by the Dawson family to market the lumber on their land. In 1950, Dawson Lumber owned four small lumber
Definitions: • Profitability ratios show the amount of capital that would be acquired through profit. • Liquidity ratios show how well CanGo can pay its creditors as the debts come due.
In my opinion, I think that raids occur in poor black neighborhoods because law enforcement knows that these neighborhoods are known for distributing narcotics. However, I don’t think this fair because they never raid the white neighborhoods and they’re known to sale drugs as well. In my opinion, reason the law enforcement raid black neighborhood is because they want to keep blacks incarcerated. They know one of the easiest ways to imprison black is through the use of drugs. This type of tactic has existed since the war on drugs in 1971. The law enforcement has always had it out for minorities, which is why we have the highest incarceration rates. In addition, when local law enforcement conduct raids, some of the effects of the criminal justice
The company's inability to receive payments from customers in a timely manner created a severe impact in the company's cash flows. The age of account receivables increased each year. In 1995 it took 49 days on average to receive payments from customers. Because of the delay in accounts receivable, Clarkson Lumber's ability to pay suppliers on time is also impacted. In 1995 it took Clarkson 38 days on
additional sales and above the annual growth and be able to broaden the firms current
Slums Introduction A Slum refers to informal settlements within urban areas or cities. The informal settlements depict inadequate housing and miserable condition with reference to living standards (Meade p 43). In the slums, numerous individuals seek housing facilities within small living spaces. The slums also lack basic local authority services such as sanitation, collection of waste, water, drainage systems, street lighting, and emergency roads. Most slums also lack schools, hospital, and public places that might offer adequate environment for social amenities. The experience of France illustrates the essence of slums within the modern society (Oberti p 58). Crime and unemployment are on the rise within the slums because of the poor
Dr. Anupam Jain ABSTRACT Efficient management of working Capital is one of the pre-conditions for the success of an enterprise. Efficient management of working capital means management of various components of working capital in such a way that an adequate amount of working capital is maintained for smooth running of a firm. An optimal working capital management is expected to contribute positively to the creation of firm value. To reach optimal working capital management firm manager should control the trade off between profitability and liquidity accurately. The purpose of this study is to investigate the