Finance: Asset and Liquidity Ratios Essay

Submitted By d749h749

Words: 355

Pages: 2

Open Document

Anushiya Shiley Gomes
Finance 300
10/20/2014
Witten Assignment The article from Computerized Investing written by CI staff, mentions about Liquidity ratios. According to the article, liquidity ratios are used to determine a company’s ability to meet its short-term debt obligations. Since companies are at a high risk of bankruptcy, it is always good to calculate liquidity ratios to make sure that the companies are on the track. The article mentions about current ratio, quick ratio and cash ratio with cash ratio being the most conservative of the three liquidity ratios. Typically calculating the ratios is the easy part and interpreting the ratios is the hard part. Performing a time-series analysis, a competitive analysis and industry and sector analyses are good first steps for fundamental ratio analysis. The article concludes by saying that it is not always good to rely on a set of ratios and that researching the firm as a whole is important. In class we learned that firms need cash and other liquid assets to pay their bills as they come due. Liquidity ratios measure the relationship between a firm’s liquid assets and its current liabilities. We also learned that the three most commonly used liquidity ratios are the current, the quick and the cash ratio. Inventories are the least liquid firm’s assets. Furthermore, we learned that interpreting the ratios, that is, comparing company ratios with industry averages and determining if it is strength or a

Financial Ratios Analysis and Comparison Paper

Financial Ratios Analysis and Comparison Paper Dianne Davis MHA 612 Professor Johnson June 7, 2014 Abstract It is important for healthcare organizations to understand their present performance and weak areas in order to generate more effective operational strategies. Financial ratio analysis is an effective tool to determine hospital’s performance on several indicators such as ability to pay debt, capability to generate revenue, and sales performance etc. The objective…

Words 1453 - Pages 6

W4 A2 S McCaskill Essay

essentials. Long-term assets represents the value of the barn and the land on which it sits. Renovations are expensed. Start-up Requirements Start-up Expenses Legal Fees $20,300 Insurance $25,800 Construction $800,000 Computer - Administrative $15,000 Marketing and marketing strategy $50,000 Architect/Remodeling $115,000 Equipment (i.e. toys) $550,000 TVs & video game consoles $21,250 Cleaning supplies $2,000 Office Supplies $2,000 Total Start-up Expenses $1,601,350 Start-up Assets Cash Required…

Words 370 - Pages 2

Woolworths Financial Ratio Report Analysis - Accounting Report Essay

Woolworths Financial Ratio Report Liquidity, Solvency and Profitability Abstract This report consists of ratio calculation and analysis of Woolworths’ liquidity, solvency as well as profitability. Liquidity ratios include current ratio, quick asset ratio and inventory turnover. Solvency ratios include debt to total asset and interest coverage. Profitability ratios include return on owners’ equity, payout ratio, return on assets, return on sales, asset turnover, cash return on sales and operating…

Words 3667 - Pages 15

Essay about Cango Financial Ananlysis

funds invested by the common stockholders. This ratio shows the return which is generated by the company on owner’s investment. It appears to be low for CanGo. However, this might not be a cause of concern as the initial public offering might have inflated the denominator. The senior management of the company is more concerned with measures like return on assets, while shareholders have a direct interest in return on assets. The debt equity ratio helps to assess the gearing of a company. It shows…

Words 1090 - Pages 5

Essay on FINANCE 1

INTRODUCTION: This Study shows that how various methods and tools like financial ratios are being used in analysing the financial position of a company, as per market value and as well as the assets value of a company. This study also shows that weather the company is efficiently managed or not with the help of Financial ratios, in order to ascertain that company is worth acquiring or not. Here, the company taken into the consideration is British Airways. British Airways is one of the leading airlines…

Words 1532 - Pages 7

Corporate Finance Essay

Part 1: Fianacial Ratios After having the financial information about Deep water experts company, we have generated the financial ratios for the company for the years 2010, 2011 respectively as below and has the following comments: Liquidity: There is more than one ratio that measures the liquidity for a company which is included in the following table: Ratio Type | 2011 | 2010 | Liquidity | Current Ratio | 3.29 | 2.67 | Quick Ratio | 2.2 | 1.798 | Cash Ratio | 1.56 | 1.08 |…

Words 1665 - Pages 7

Generally Accepted Accounting Principles and Net Profit Margin Essay

show the potential investors, such as bank to show how profitable company is. The Balance Sheet is a statement of financial position of a business at a specific point in time usually at the end of the month or year. The Balance Sheet sums up the assets, debts and other long-term liabilities and the owners’ Capital at a particular point of time. How Gross profit calculated? Gross profit is calculated by deducting cost of goods sold from sales. To demonstrate this let’s take C&V example here Sales…

Words 1189 - Pages 5

605 Applied Research Analysis 6 8 13 2 1 Essay

required filing with the Securities and Exchange Commission. 2. Research a company and competitor specified information within the 10-K. 3. Compute certain liquidity, leverage, profitability, and turnover ratios for a company and competitor. 4. Analyze results and estimate company business strategies/business models from data gathered and ratios computed. Requirements: 1. Review the audio/video regarding how to access a company 10-K and brief comments regarding the 10-K annual filing: http://www…

Words 478 - Pages 2

Aeo Analysis Essay

Jin Qian Profitability Ratios: Fiscal Year | 2008 | 2007 | Fiscal Year End Date | 01/31/09 | 02/02/08 | Net Profit Margin | 6.0% | 13.1% | Gross Profit Percentage | 39.3% | 46.6% | Asset Turnover | 1.56 | 1.59 | Fixed Asset Turnover | 3.17 | 3.73 | Return on Assets(ROA) | 9.3% | 20.8% | Return on Equity( ROE) | 13.0% | 29.0% | Earnings per Share (EPS) | 0.87 | 1.88 | Price/Earnings | 10.4 | 12.5 | The ratios in this section focus on the level of profits…

Words 1791 - Pages 8

Essay on Wesfarmers Financial Analysis

financial analysis ratios: Liquidity ratios, efficiency ratios, profitability ratios, financing ratios, and market-based investments and other ratios, are all…

Words 1976 - Pages 8