Retention Capability To determine CCI’s retention capabilities, we looked at Dun and Bradstreet’s key business ratios using CCI’s balance sheet and income statement. In selecting retention limits for a business, it is important to look at the company’s liquidity, net worth position, income maintenance, and their total debt. The greater amount of debt that a company has the more dependent a company is on risk transfer. Dun and Bradstreet’s ratios are broken up into three different categories: solvency, efficiency, and profitability.
The solvency category tells us CCI’s ability to pay off their debt. Within this category is their quick ratio, current ratio, current liabilities to net worth, current liabilities to inventory, total liabilities to net worth, and fixed assets to net worth. In each of these categories, CCI fell well below the industry median, making these ratios unfavorable. One of the key ratios in this section is the current ratio, which measures a company’s ability to pay off their short-term obligations. CCI’s ratio was .7, which is well below the industry median of 1.7 and means that their current liabilities far exceed their current assets. Ideally, this ratio should be greater than 1. Another key ratio to look at in the solvency category is their total liabilities to net worth. The industry median is 113.5 and CCI’s is 464.94, which makes it well above the median average and unfavorable for CCI to retain risk.
The next category is