1. & 2. For Company G, We will be assessing each ratio as a: strength, no concern or as a weakness. A. Current Ratio: A liquidity ratio that measures a company's ability to pay short-term obligations. Company G has a current ratio of 1.8 for year 12. When the current ratio of 1.8 for year 12 is compared to year 11’s ratio of 1.86, we see this ratio has declined slightly. When compared to the industry quartiles this ratio falls below the first quartile of 3.1, falls below the second quartile of 2.1, and above the third quartile of 1.4. This is an area of weakness for Company G and shows some reason to be concerned. They could be investing the excess money into other areas. Too much cash on hand is not a bad thing, but it is if you…show more content… This ratio indicates this is a likely strength with Company G. Days receivable is the collectability of accounts receivable, which means, how fast can cash supply be built. In Company G’s case, it’s pretty quick compared to the other industry. F. Debt Ratio: This ratio indicates what proportion of debt Company G has relative to its assets. The measure of 29.46% for Company G gives an idea to the leverage of the company along with the potential risks the company faces in terms of its debt-load. Company G has a percentage of 29.46%, for year 12. When the current percentage of 29.46% for year 12 is compared to year 11’s percentage rate of 28.34%, we see this ratio has increased slightly. When compared to the industry quartiles this percentage falls below the first quartile of 30.0%, falls below the second quartile of 45.0%, and below the third quartile of 66.0%. This percentage indicates a strength with Company G’s debt ratio. They have much smaller debt ratio than in comparison with others in the industry. G. Times-Interest Earned Ratio: A metric used to measure Company G's ability to meet its debt obligations. Company G has a times interest earned ratio of 36.15 for year 12. When the current ratio of 36.15 for year 12 is compared to year 11’s ratio of 31.12, we see this ratio has increased slightly.
