Term Debt Instruments That Were Issued By Shoppers

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.

| |financial statements related to cash and cash equivalents, receivables, and inventories. | | |

4. May Department Stores is a merchandising company and I would link it with balance sheet number four. First clue are the inventories, 23, 2 % of total assets, usual for this type of company. As stated above, the offer their own credit cards, which can be explained the level of account receivables, 25, 7 % of total assets. Compared to the other five companies, May Departments Stores have an amount of PPE (20 % of total assets) that suits best for this type of company. The current liabilities are relatively high, 38, 3 % of total liabilities and shareholders’ equity, usual for merchandising company and a low level of long term debt, 9, 3 %.

Liquidity ratios are the measure of a company’s ability to meet its short term liabilities by converting its assets into cash without losing value. The results of the liquidity ratios depend on the outcome of Current ratio and quick ratio. In the appendix-I, in 2011 Target had better Current ratio

The company’s current assets are just over two times its current liabilities, giving it a current ratio of 2.08. This is a sign of financial strength. The Quick ratio (current assets-inventory then divided by current liabilities) is 0.96. This measures the company’s ability to come up with cash in a matter of hours to days. It has working capital (current assets-current liabilities) of $7,508,998. With a working capital per dollar of sales of 15%. This is adequate given the high inventory turn.

Next, we looked at the Current Ratio, a liquidity ratio calculated by dividing a company’s total current assets by their total current liabilities. This ratio gives an investor insight into whether or not a company is able to meet its short-term debt obligations and be able to remain a viable organization (Brigham & Houston 87). Again Whole Foods with a Current Ratio of 1.9 times assets to debt exceeds the industry average of 1.4 and is ahead of each of the competitors we looked at as well. This tells prospective investors that the financial health of

When calculating the liquidity for the company, I used two ratios focusing on the company’s short term of financial strength and primarily on the current assets, liabilities, and the inventories. In 2014 the current assets for the company was $1,377,165 and the current liabilities in the same period were $457,603. The previous period current assets were $1,496,863 and the current liabilities were $568,209. Using the current ratio to calculate how many dollars in assets are likely to be converted to cash within a year for that period in enabling the company to pay debts that come due in the same year. In both 2014 and the previous period the company’s

Balance Sheet – Our cash position at May 31, 2016 was 103.0 Days of Cash on Hand, with 34.14 offsetting days in third party reserves. Net Days in Accounts Receivable declined to 55.0 days, reflecting continued effects to address the buildup of receivables. Our current Debt Service Coverage Ratio was at 3.26-to-1, well in excess of the minimum covenant requirement

Management must make estimates about uncollected receivables when analyzing the adequacy of the company’s allowance for doubtful accounts. This is done by evaluating the business’ account receivables, customer concentrations, historical debts, customer creditworthiness, current economic trends, and changes in its

8. when a company has more current assets in inventory and prepaid, their current ratio is high but they have little quick liquidity assets on hand like cash or accounts receivable.

Liquidity ratio. The firm’s liquidity shows a downward trend through time. The current ratio is decreasing because the growth in current liabilities outpaces the growth of current assets. The quick ratio is also declining but not as fast as the current ratio. From 1991 to 1992, it only decreased 0.35 units while the current ratio decreased 0.93 units. Looking at the common size balance sheet, we also see that the percentage of inventory is growing from 33% to 48% indicating Mark X could not convert its inventory to cash.

The pressure from “tone at the top” to keep the expected level of revenues and profits

It helps the firm through seasonal peaks in financing needs that are due to primarily buildups of inventory and accounts receivable. As the firm converts inventories

* Commercial paper is an unsecured short-term debt instrument issued by a corporation. On average, maturities range from 1 to 2 months and are usually no longer

In the consumer goods industry, liquidity ratios are paramount (Tarver, 2017) as they determine the company’s immediate revenue-generating activities and consequent ability to meet short-term liabilities. This is measured using Current and Quick Ratios (Appendix 1, a). The industry has an average Current Ratio of 0.86 TTM (Morningstar, 2017). RB’s Current Ratios seem to have increased from 2015’s 0.57 to 0.63 in 2016 (Appendix 1, a). This means that if RB liquidates all its Current Assets, they will only be able to cover 57% and 63% of its liabilities and not the full amount. While there has been an increase in percentage coverage between the years, RB is still below the industry average and therefore needs to collect back money owed to them quicker, stop selling inventory on credit or sell-off unproductive current assets. For a holistic view of the RB’s liquidity, the Quick Ratio was calculated (Appendix 1, a). By removing Inventory from the equation, the ratio doesn’t take into