Understanding The Current Health Of The Organization

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For any organization to properly understand the current health of that organization one of the best ways to gain this understanding is by completing a ratio analysis of the company. This level of understanding helps providing a solid understanding of the financial health of the organization and the long-term trajectory of the organization as a whole. This remains true with Genesis Energy, which as a newly established operations management team may need all of the assistance that the organization can get. Additionally, it is important to understand how an organization preforms compared to the completion. According to the Wall Street Journal (2014): “Available Cash before Reserves, also referred to as distributable cash flow, is commonly…show more content…
“Each of these analysis techniques offers very specific uses but in general allows analysts to evaluate company performance over time, taking into account relative size, across industries” (Argosy University, 2014, para. 1). Being able to have a better understanding of the organization’s performance over a certain period of time is extremely beneficial. Primary way of doing this is calculating financial ratios in order to understand the overall health of the company. “Financial ratios are derived from the balance sheets and income statements and are generally divided into five major categories: profitability, liquidity, debt, asset activity, and market size. Each serves as an independent calculation, but jointly, they present a financial picture of the organization” (Argosy University, 2014, para. 1). Completing a trend analysis will give a better picture of the organizations health over the last three years and will give the organization the understanding needed to make any necessary changes. The trend analysis for the Genesis Energy company spans a three year timespan from 2011 to 2013. As part of this analysis it reviewed the following areas: Liquidity, Inventory Turnover, Debt Ratio, Basic Earnings Power, and Price per Cash Flow. To start off it is important to understand that the liquidity of a company is the company’s ability to convert their assets to cash. Over the last
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