Liquidity Ratio and Profitability Ratio Report

830 WordsJun 13, 20094 Pages
Report Introduction: Any successful business the owners is always calculate the performance of the company, comparing it with the company 's historical figures, with its industry competitors, and even with successful businesses from other industries. To complete a thorough examination of your company 's effectiveness, however, I will calculate the statement of financial performance and statement of financial position, so I need to look at more than just easily attainable numbers like sales, profits, and total assets. I must be able to read between the lines of the financial statements and make the seemingly inconsequential numbers accessible and comprehensible. This very big data overload could seem astounding. Luckily, many…show more content…
Following is the Current Ratio, the Quick Asset Ratio, the Stock Turnover Rate and the Debtors ' Turnover Rate. These trials are concentrated upon the current assets and current liabilities to assess the Desert Hotel ability to meet their financial commitments as they become due. 1.Current Ratio For the 2007 -2009 financial year, in 2007 is the ratio most be at least 2:1, the Desert Hotel had 30000 KD in total current assets and 3000 KD in total current liabilitiesshown by 10 KD. That mean the percentage are bad ratio this shows that the Desert Lodge accommodation Hotel increased. This gives the company 2:1 for every KD of current liabilities. This could be seen as an unsafe situation, but by looking into the 2008 financial year Statement of Financial Position, it ascertained that the company had 2:1 for every KD of current liabilities. That is 450000 KD in total current assets and 4000 KD in total current liabilities shown by 2009 the, Desert Hotel had 100000 KD in total current assets and 6000 KD in total current liabilities shown by 16.66 KD: one. 2.Quick Assets The Quick Asset Test is a stringent test that indicates if a firm has enough short-term assets, without selling inventory, to cover its immediate liabilities. It is similar but a more strenuous version of the Current Ratio or "Working Capital", indicating
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